In December 2022, Congress passed the SECURE Act 2.0, intended to build upon the SECURE Act of 2019, that aims to improve retirement-savings opportunities. The legislation enjoyed broad bipartisan support because it included many new provisions that promote savings, provide business incentives, and improve the ways Americans save for retirement.
If you read the full bill text, you’d see there is a lot in this bill: nearly one hundred separate provisions that all take effect in the next several years, most of which do not apply to FPPA administered plans. The purpose of this article, therefore, is to provide a brief overview of the SECURE Act 2.0 provisions that FPPA may adopt, which are most applicable to our Members. Everyone’s situation is different, so we encourage you to review the Act for yourself to see if there are savings, investment, or other opportunities that might apply to you.
| Provisions already in effect, as of 1/1/2023 | Applicable to Members of: |
|---|---|
| Section 107 increases the Required Minimum Distribution age to 73. This will further increase to 75 in 2033. | 457(b) plans, Statewide Money Purchase Plan, Money Purchase Component, and other Defined Contribution and Deferred Compensation Plans. |
| Section 302 reduces the penalty for failure to take required minimum distributions from 50% to 25%, or even as low as 10%. | 457(b) plans, Statewide Money Purchase Plan, Money Purchase Component, and other Defined Contribution and Deferred Compensation Plans. |
| Section 306 removes the “first day of the month” requirement for 457(b) plans, allowing Members to change their monthly contribution rate on any day before their payroll date. | 457(b) plans. |
| Section 329 extends the existing early withdrawal penalty exception to public safety officers to now include those who separate service at the earlier of age 50 or25 years of service under the plan. | Colorado Springs New Hire Pension Plan, and other Defined Contribution and Deferred Compensation plans. |
| Provisions Effective 1/1/2024 | Applicable to Members of: |
|---|---|
| Section 325 eliminates the requirement in employer-sponsored Roth plans that Members take required minimum distributions from Roth accounts before their death. | 457(b) plans, Statewide Money Purchase Plan (Roth roll-over accounts), and Money Purchase Component (Roth roll-over accounts). |
| Section 327 allows surviving spouses to elect to be treated as the deceased employee for purposes of Required Minimum Distribution rules. | 457(b) plans, Statewide Money Purchase Plan, Money Purchase Component, and other Defined Contribution and Deferred Compensation plans. |
| Provisions Effective 1/1/2025 | Applicable to Members of: |
|---|---|
| Section 109 increases catch-up contribution limits for workers between ages 60-63. | 457(b) plans, and other Defined Contribution and Deferred Compensation plans. |
| Provisions Effective 1/1/2027 | Applicable to Members of: |
|---|---|
| Section 309 allows first responders to exclude on-duty pension payments from gross income after reaching retirement age. | Statewide Death & Disability Plan. |
Ryan Woodhouse is the Content and Publications Manager for the Fire & Police Pension Association of Colorado. When not managing content for FPPA, Ryan can be found fly fishing in the Colorado high country or shouting at the TV during University of Wisconsin football and basketball games.