AAII Investor Update: Changes to Retirement Savings In Omnibus Bill

Here's a little holiday gift courtesy of this week's edition of the AAII that many of us might useful -- how the new omnibus bill impact our retirement savings. Have a blessed holiday, stay warm, and travel safe.  

AAII Investor Update: Changes to Retirement Savings In Omnibus Bill

Thursday, December 22, 2022

Dear Member,

I mentioned in my December AAII Journal Editor’s Note the possibility of retirement savings legislation being passed during the lame-duck session in U.S. Congress. This week, that possibility turned into a probability. Included in the 4,155-page omnibus spending bill (at least that was the length as of Tuesday) is a section titled “SECURE 2.0 Act of 2022.” The name is a reference to the SECURE Act of 2019, which made changes to retirement savings. The new legislation adds many changes to retirement savings.

My initial impression is that two demographic groups will be the primary beneficiaries from the changes. The biggest beneficiaries are high-income earners who are currently in their late 50s. They’ll get the opportunity to make larger catch-up contributions to their workplace retirement accounts and will have three extra years to strategically reduce their traditional individual retirement account (IRA) and 401(k) balances before required minimum distributions (RMDs) start. Younger adults will have a new opportunity to build up emergency savings, get help paying down their student debt and potentially receive a matching retirement savings contribution from the government.

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