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requirements. Also, the period of service In response to SECURE 2.0, the for clients in the upcoming tax year. As
is reduced from three years to two years Senate Health, Education, Labor, and of this writing, the Senate is in its review
(Title I, §116). Pensions Committee introduced its process, and the final legislation is likely
own version of the legislation on June 7, to be different from the current drafts.
Title II: Preservation of income 2022, the RISE & SHINE Act. Regardless of any law that eventually
The proposed legislation amends the The RISE & SHINE Act introduces passes, tax preparers need to understand
RMD rules for life annuities to permit several of its own provisions. Most nota- the many changes it could make to the
certain additional kinds of payments bly, the included Emergency Savings Act retirement plan rules and relay those
(Title II, §201). of 2022 would allow participants and changes to their clients to allow them to
For qualifying longevity annuity con- employers to contribute to a pension- maximize those benefits.
tracts, the 25% premium limit is repealed. linked savings account, limited to the From Casey Daderko, CPA, and
Joint and survivor benefits are enhanced. lesser of $2,500 or a predetermined Tim Cotter, CPA, J.D., LL.M.,
A “free-look” period allowing recension amount by the plan sponsor. Wilkes-Barre, Pa.
of the contract within 90 days is permit- The RISE & SHINE Act does not
ted (Title II, §202). include changes to the saver’s credit or Rembrandt and retirement:
the small business retirement plan cred- The pitfalls of collectibles and
Title III: Simplification and its, such as are included in SECURE self-directed IRAs
clarification of retirement 2.0. It also does not include modifica- Many investors may be eager to explore
plan rules tions of the catch-up contribution alternative investments to diversify their
The accidental overpayment of retire- amounts. The RISE & SHINE Act portfolios. One approach is by using a
ment plan benefits will not result in non- does require employers at least once self-directed individual retirement ac-
compliance with plan requirements, and every three years (but not more than count (IRA). While this approach allows
fiduciaries may exercise their discretion once annually) to automatically re-enroll IRA owners to invest in a variety of
not to seek recovery of the overpayment eligible employees who have previously nontraditional asset classes, the inherent
from participants and/or beneficiaries opted out of the arrangement in a quali- flexibility of self-directed IRAs may also
(Title III, §301). fied automatic contribution arrange- pose serious tax risks as retirement savers
A “retirement savings lost and found” ment, unless the employees elect to opt venture into the alternative investment
online database managed by the U.S. out again. space. Some of these alternative invest-
Department of Labor will allow indi- Several provisions within the pro- ments seek to provide a return on capital
viduals to search plans and contact the posed legislation would take effect for by investing in entities that hold specific
administrator of any plan in which they tax years beginning after Dec. 31, 2022. types of collectibles, such as classic cars
are a participant or beneficiary (Title III, As such, they could affect tax planning and art. This item explores how certain
§306).
Several revenue provisions included
within the bill would go into effect for tax
years beginning after Dec. 31, 2022. The
proposed legislation allows for an election
to be made to treat Roth IRA contribu-
tions as SIMPLE IRA contributions and
IMAGE BY JACKYENJOYPHOTOGRAPHY/GETTY IMAGES vided on withdrawal rules for hardship
for simplified employee pension (SEP)
plan contributions to be designated as
Roth contributions. Clarification is pro-

under 403(b) plans. There is also an op-
tion to treat employer matching contribu-
tions as Roth IRA contributions.
RISE & SHINE Act
Once SECURE 2.0 passed the House, it
was sent to the Senate for its review and
revision process.

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