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TAX CLINIC

plan. This credit amount may not exceed
$1,000 per employee and is phased out if
the number of employees exceeded 50 in
the prior tax year (Title I, §102).
A focus is placed on increasing public
awareness of the Sec. 25B qualified retire-
ment savings contributions, or “saver’s,”
credit, and its currently tiered applicable
percentages based on adjusted gross
income (AGI) are modified to a single
percentage of 50%, subject to a higher
AGI phaseout range, for tax years begin-
ning after Dec. 31, 2026 (Title I, §§103
and 104).
The applicable age for required mini-
mum distributions (RMDs) is increased
from the current 72, based on the tax-
payer’s date of birth, as follows:
■ For an individual who attains age 72
after Dec. 31, 2022, and age 73 before
simplifying and clarifying retirement Jan. 1, 2030, the applicable age is 73.
Employee Benefits plan rules. ■ For an individual who attains age 73
& Pensions Some key provisions of the bill are: after Dec. 31, 2029, and age 74 before

Jan. 1, 2033, the applicable age is 74.
Key proposed provisions of Title I: Expanding coverage and ■ For an individual who attains age 74
‘SECURE 2.0’ increasing retirement savings after Dec. 31, 2032, the applicable age
The Securing a Strong Retirement Act of For plan years beginning after Dec. 31, is 75.
2022, H.R. 2954, also called “SECURE 2023, automatic enrollment in 401(k) This gradual increase applies to
2.0,” is the most prominent recently pro- and 403(b) plans would be required once RMDs made after Dec. 31, 2022, by tax-
posed legislation concerning retirement an employee is eligible. The minimum payers who reach the age of 72 after that
plans. It builds upon changes enacted by contribution percentage begins at 3% and date (Title I, §106).
the Setting Every Community Up for increases by 1% annually until reaching For tax years beginning after Dec. 31,
Retirement Enhancement (SECURE) 10%, but employees can elect out of the 2023, the Sec. 219(b)(5) $1,000 indi-
Act of 2019, P.L. 116-94. In addition, the increase. Exceptions apply for SIMPLE vidual retirement account (IRA) catch-up
Senate introduced its own version of the plans, plans established or contracts contribution amount for individuals age
legislation, S. 4353, formally known as the purchased before the date of enactment, 50 and older is increased, based on a
Retirement Improvement and Savings certain multiemployer plans, and govern- cost-of-living adjustment. Additionally,
Enhancement to Supplement Healthy mental and church plans, as well as new the Sec. 414(v) catch-up contribution
Investments for the Nest Egg (RISE & business and small business plans (Title amount is increased for participants age
SHINE) Act of 2022. This item discusses I, §101). 62 through 64, in SIMPLE plans from
a few key provisions of SECURE 2.0 and For tax years beginning after Dec. 31, $3,000 for 2021, adjusted for inflation,
differences between it and the RISE & 2022, there is a proposed increase to the to $5,000 and from $6,500 (for 2021) to
SHINE Act. Sec. 45E small employer pension plan $10,000 for all other plans (Title I, §§107
SECURE 2.0 was introduced May startup cost credit for certain smaller and 108).
4, 2021, by Rep. Richard Neal, D-Mass. employers. An eligible employer with no Qualified student loan payments
It received bipartisan support and more than 50 employees may claim up to are considered a matching contribution
was passed by the House on March 100% of qualified startup costs. There is under Sec. 401(m)(4)(A) (Title I, §111). PHOTO BY TERRY VINE/GETTY IMAGES
29, 2022, by a vote of 414–5. This bill an additional credit for employer contri- Retirement plan incentives are en-
focuses on three main areas: expand- butions by certain eligible employers. The hanced for certain part-time workers.
ing coverage and increasing retire- allowed credit is increased by a percentage Clarification is provided on the defini-
ment savings, preserving income, and of employer contributions to an eligible tion of part-time workers and vesting

10 October 2022 The Tax Adviser