From Retirement Now Newsletter May 20th 2021

The retirement landscape continues to change.

I was reminded of that recently when reading through a CPA’s Twitter feed going over some new legislation that will eventually get voted on.

The House Ways & Means Committee unanimously (thus bipartisan support) passed some new retirement legislation called the “Securing a Strong Retirement Act” HR2954.  

It hasn’t been put to a vote in the House yet and doesn’t have a companion bill yet passed in the Senate. So these proposals may not become law and if they do, there will likely be some revisions made to this.

But it has bipartisan support and most politicians love to talk about how they saved everyone’s retirement. So there’s a good chance some of the proposals will eventually become law.

Here’s some of the juicier proposals as it relates to retirement:

-Required Minimum Distributions are proposed to get pushed back from age 72 to age 75 by the year 2030

-IRA catch-up contributions (for people 50+) will be indexed to increase with inflation, so people can set aside more in their IRA’s as they get closer to retirement

-All “catch-up contributions” would be required to be made to Roth accounts. Kinda weird proposal in my opinion, but I think it shows Congress does love Roth IRA’s since Congress gets its taxes up front on those funds. This is ultimately a positive indicator that Roth’s will be around for a long time… which is of course good for everybody in my opinion.

-For those using a SEP IRA (like small business owners often do), they are now proposing a Roth option for these. Very good news.

-For those over 70.5 years that like to give charitably from their IRA using Qualified Charitable Distributions, the $100k limit per year will be indexed to increase with inflation, thus increasing over time the amount you can give.

-The penalty for missing a Required Minimum Distribution is currently 50%! It is being proposed to reduce down to 25%. And reduced further to 10% for errors if it is corrected within a Correction Window, which could be as long as 3 years.

Will any of these proposals eventually become law?

We don’t know for sure, but I think there is a good chance, possibly with some modifications.

Conclusion: What I am sure of is that things will continue to change on the retirement landscape. Which makes it more important than ever to have a plan in place to keep up with these changes and to take advantage of them to the fullest extent possible.

If you are concerned about what possible future changes could do to your retirement and would like to know about ways to help protect yourself and help have a more secure retirement, click here to learn about our services and scroll down to schedule a time for us to chat.


Chris Hammond