In Perspectives

On March 29, 2022, the United States House of Representatives passed the Secure Act 2.0 with overwhelming bipartisan support. The bill expands on the retirement savings reforms that came with the original Secure Act of 2019. The Senate also has a similar bill working its way through the system with broad support. Of course, these bills would need reconciliation before going to President Biden for signature and implementation. The House bill contains many different provisions that make it easier for people to save for retirement while also providing the opportunity for retirees to delay taking money from their retirement plans and IRAs for a longer period of time. Some of the important changes for retirement savers that would come with full passage of the bill are as follows.

Mandatory enrollment in defined contribution retirement plans for all new eligible employees with a minimum deferral of 3%, increasing annually by 1%, up to 10% of pay. Employees can select a different contribution rate of course. Certain employers are exempt from this requirement, including those with less than 10 employees, new business, churches, and government plans.

Catch-up contribution limits increased from $6,500 to $10,000 beginning in 2024 for anyone who is age 62 to 64. The current catch-up contribution limit of $6,500 will remain for anyone age 50 to 61. In the bill, all contribution limits are indexed for inflation in the future. Starting in 2023, all catch-up contributions must be Roth contributions, meaning they come from after-tax income, but qualifying withdrawals will be free from taxation in the future.

Required Minimum Distribution (RMD) age is extended to age 75 over time. The schedule for extending the RMD age is as follows:

  • The RMD age for those born between 1/1/1951 and 12/31/1956 will be age 73
  • The RMD age for those born between 1/1/1957 and 12/31/1958 will be age 74
  • The RMD age for anyone born after 12/31/1958 will be age 75

Of course, the bill says this in a much more complicated way, but this is the way it works out based on birth dates.

An employer is authorized to make matching contributions against contributions intended to go toward student loan payments, even if the student loan debt prohibits an employee from making retirement contributions. This stands to be a considerable benefit for younger employees who are still struggling to pay off their college debts. They will no longer miss out on their employer’s retirement plan contributions while they concentrate on paying down their debt. No doubt, this change could be the kickstart many young people need to start their retirement savings.

Long-term part-time workers would now be eligible for employer-provided retirement plans provided they had two years of consecutive service with at least five hundred hours each year.

There are various provisions in the House bill designed to encourage companies to start retirement savings plans for their employees. These include increased tax credits for small businesses that start retirement plans, expanded ability to correct errors, increased 403(b) flexibility, increased flexibility for non-profit employers to work together and others designed to make it easier for employers to sponsor retirement plans for their employees.

Legacy Trust will be watching the progress on this legislation carefully. We will report the outcome as quickly as possible. We encourage you to call us if you have any questions on this or any other topic.

Brian Moore, MBA, CFP®, CTFA®
Senior Wealth Advisor

Legacy Trust and Your Right to Financial Privacy

At Legacy Trust we have established policies and practices that respect the financial privacy of all individuals who use our trust company. We believe it is critical to comply with the laws and regulations designed to secure your financial privacy. Your relationship with us as our client is very important to us, and we want you to understand our policies and practices about handling your information.

This Policy applies to you – This Policy applies to our relationships with individual clients who inquire about or obtain products or services from us for personal, family and household purposes.

Strict security measures – We take the security of information very seriously. We have established security standards and procedures to prevent access to client information. We maintain physical, electronic and procedural safeguards to guard client information.

Limited employee access – We have established procedures to limit employee access to information to only those employees with a business reason for accessing such information. We educate our employees about the importance of confidentiality and client privacy. We take appropriate disciplinary measures to enforce employee responsibilities regarding client information.

Why we collect information – We collect information about you to:

  • accurately identify you;
  • protect and administer your records, accounts and funds;
  • help us design or improve our products and services;
  • understand your financial needs;
  • save you time when you apply for new products and services; offer you quality products and services; and comply with certain laws and regulations;

We collect information – We collect and maintain your personal information so that we can provide investment management and other services to you. The types and categories of information that we collect and maintain about you include:

  • Information we receive from you to open an account or provide investment advice or other services to you (such as your home address, social security number, telephone, financial information and investment objectives).
  • Information that we generate to service your account or from our transactions with you (such as account statements and other financial information).
  • Information on your transactions with nonaffiliated third parties.

We have established procedures so that the financial information we collect is accurate, current and complete. We are committed to work with you to promptly correct any inaccurate information.

Our selective sharing of information – In order for us to provide investment management and other services to you, we do disclose your personal information in very limited instances, which include:

  • Disclosures to nonaffiliated companies as permitted by law, including those who help us service your account (such as providing account information to brokers and custodians).
  • Other limited disclosures as permitted by law, for example, required reports to government entities.

We do not share your information with third parties for marketing purposes. We do not sell your information.

Former clients – If you end your relationship with us, we will continue to adhere to the privacy policies and practices described in this notice.

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USA PATRIOT Act

Important Information About Procedures For Opening A New Account

To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify and record information that identifies each person who opens an account.

What this means for you: When you open an account, we will ask for your name, address, date of birth and other information that will allow us to identify you. We may also ask to see your driver’s license or other identifying documents.

We apologize for any inconvenience this may cause; however, federal law prohibits us from waiving these requirements.

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