SECURE 2.0 retirement changes to impact Purdue retirement programs

Human Resources would like to make employees aware of key retirement changes effective as part of SECURE 2.0 — legislation designed to expand access and improve retirement savings for individuals.

In 9 ways SECURE 2.0 could impact you, Fidelity provides an overview of key SECURE 2.0 retirement changes now in effect or slated for future years. While there are many required and optional provisions included in the law, a few of those required changes impact participants in Purdue’s retirement programs.

Here are SECURE 2.0 highlights to know now:

• The required age to begin taking RMDs (required minimum distributions) has increased to age 73 in 2023 and will increase again to age 75 in 2033.
• Starting in 2024, RMDs will no longer be required from Roth accounts in employer retirement plans.
• The penalty for failing to take an RMD has decreased from 50% to 25% of the RMD amount.

These changes are welcome news for many retirement plan participants approaching RMD age. This increase in required age will allow participants the ability to keep retirement savings in their retirement plan longer, allowing the funds the opportunity for additional growth while remaining in the plan. The reduced penalty will also allow participants to preserve more of their retirement income should they fail to take their RMD in a timely manner.

An additional requirement, originally set to begin in 2024, will require all employee catch-up contributions — for individuals aged 50 and above earning $145,000 or more in the prior year — to be designated as Roth contributions only. The IRS has since released guidance extending the deadline to implement until 2026. The extension will allow additional time to comply with this new requirement.

Purdue continues to assess the impact of this wide-sweeping legislation, as many SECURE 2.0 provisions are complex and the university awaits additional guidance from the IRS and other governmental entities. More information will be shared as relevant updates become available.

To learn more about these changes, employees may schedule an appointment with a Fidelity retirement planner by calling 800-642-7131 or scheduling online. For more information on what to expect from a consultation with a Fidelity retirement planner supporting Purdue’s retirement plans, see the video “Retirement Planning — How You Benefit From a Fidelity Consultation.”

Employees also are encouraged to attend sessions during the upcoming Road to Retirement program Sept. 26-29 for a variety of live virtual and prerecorded financial wellness and retirement planning sessions.