Keep an eye on this bill. Of all the the bills that could be enacted in 2022, this one has the best chance, having passed out of committee unanimously, with full bipartisan support. See if you may be affected by these proposals in 2022:
‘Rothification’
Secure 2.0 includes provisions allowing both SIMPLE and SEP Roth IRAs. In addition, plan catch-up contributions would be required to be made to Roth plan accounts, and plans could allow participants to have employer matching contributions made as Roth contributions.
Other Proposed Changes
- Increasing the age at which RMDs begin over time from 72 to 75.
- Indexing $1,000 IRA catch-up contributions for inflation.
- Increasing the limit on catch-up contributions to 401(k)s and other plans for individuals who have attained age 62, 63 or 64.
- Allowing matching contributions on student loan payments.
- Eliminating the requirement that premiums for qualifying longevity annuity contracts be limited to 25% of an individual’s account balance. (Note: For 2022, the QLAC limit has increased from $135,000 to $145,000, based on IRS inflation-adjusted increases.)
- Reducing the penalty for failure to take RMDs from 50% of the shortfall to 25%.
- Expanding the IRS self-correction program (EPCRS) to include IRAs.
- Indexing the $100,000 qualified charitable distribution limit to inflation and allowing a once-in-a-lifetime QCD to a split-interest entity such as a charitable remainder unitrust.
- Expanding the age 50 exception to the 10% early distribution penalty to private-sector firefighters.
- Changing the rules for when the statute of limitations begins for the excise tax on excess IRA contributions.
- Limiting the repayment of qualified birth or adoption distributions to three years.
- Allowing penalty-free withdrawals from IRAs and retirement plans for individuals in cases of domestic abuse.
- Limiting the loss of tax-deferred treatment to the portion of an IRA that is involved in a prohibited transaction.