TSP

There is support in both the House and Senate to further raising the age for RMDs, among other changes despite recent legislation. Image: Andrew Angelov/Shutterstock.com

Dating back to its introduction on March 29, 2019, we have been talking about the SECURE Act; an act that, among other things, changed the age for required minimum distributions (RMDs) from 70 ½ to 72. The Act had bipartisan support and had little trouble clearing the House and Senate and was signed by President Trump with an effective date of January 1, 2020.

Soon after the implementation of the SECURE Act, lawmakers and lobbyists began thinking about making yet more changes to the laws regarding retirement savings. In May of 2021 the Securing a Strong Retirement Act of 2021 (called by most, SECURE 2.0) was introduced in the House of Representatives. Moving with its usual speed, SECURE 2.0 passed the House on March 29, 2022, and now it’s called the Securing a Strong Retirement Act of 2022.

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Now the Senate has gotten into the act, and we may end up with the Securing a Strong Retirement act of 2023 if the legislative process moves at its normal pace. Many of the provisions of the two acts that were introduced in the Senate in June of 2022 are the same as those of SECURE 2.0 but, of course, there are differences that will require reconciliation with the House bill. Perhaps we’ll end up with a Securing a Strong Retirement Act of 2024 by the time it’s all over.

Here are some of the similarities:

• Both the House and Senate want to raise the age for RMDs from 72 to 75. The House wants to do it gradually, ending up with an age of 75 in 2033. The Senate wants to do it in one fell swoop that won’t be effective until 2032.

• Both the House and Senate want to increase the amounts of catch-up contributions for older workers to $10,000. But they define “older” differently. The new amount would apply to those who are 62, 63, and 64 in the house version and 60, 61, 62, and 63 in the Senate version. Catch up contributions for those under these ages would remain the same as they are today.

• Both the House and Senate want to index the IRA catch-up amount for inflation (it has been $1,000 since 2006), but they chose different effective dates.

• Both of the houses want to mandate that all catch-up contributions be treated as Roth contributions, but they have different effective dates.

The Senate, however, wins the “acronym wars” hands down. The Senate bill dealing with company plans (such as the TSP) is called RISE & SHINE Act. That comes from Retirement Improvement and Savings Enhancement to Supplement Health Investments for the Nest Egg Act. Good grief! Do they have staffers whose sole job is to come up with tortured acronyms like this one? The acronym for the bill that deals with individual retirement topics is almost reasonable compared with the one above. It is called the EARN Act; short for Enhancing American Retirement Now.

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Whatever goofy acronyms we end up with; it’s pretty certain that there are more changes coming for American retirement.

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