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The Sequel is Now Law – What’s In SECURE Act 2.0?


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February 05, 2023

The $1.7 trillion federal spending bill for 2023 signed into law at the end of December 2022 included the Setting Every Community Up for Retirement (SECURE) Act 2.0. While it is not considered to be as groundbreaking as the original SECURE Act that became law four years ago, the bill does include several noteworthy provisions intended to shore up retirement readiness in the United States.

Among other things, SECURE Act 2.0 provides more incentives for employers to offer qualified retirement plans and for employees to participate in them. Some of the changes are already in effect, while others will become effective in future years.

Here is a high-level overview of the key provisions of SECURE Act 2.0:

Required Minimum Distribution (RMD) starting age has been pushed back
  • If you were born between 1951 and 1959, your RMD starting age is now 73
  • For those born in 1960 or later, it is now age 75
  • There is no change for those born in 1950 or earlier - the RMD starting age remains age 72
Roth Account Changes
  • RMDs will no longer be required from Roth 401(k), Roth 403(b), or governmental 457(b) plan accounts
  • Roth SIMPLE and Roth SEP Accounts are now allowable. However, it will take time for custodians to make them available.
  • Employer contributions (matching or non-elective) to retirement plan accounts can now be Roths. Note that the contribution amounts would be included in gross income
  • Catch-up contributions for high wage earners (> $145K) must be to Roth accounts. SIMPLE IRA accounts are excluded from this requirement.
529 Plan Accounts can be transferred to a Roth IRA
  • Roth IRA account owner must be the same as the 529 plan account beneficiary
  • 529 Plan account must have been opened for at least 15 years
  • Contributions made to 529 plan account in last 5 years cannot be moved to Roth
  • Maximum lifetime transfer to the beneficiary is $35,000.
Higher catch-up contribution limits can be made in IRA and retirement plan accounts
  • Higher catch-up contributions can be made by retirement plan participants (including SIMPLE IRAs) ages 60 to 63.
  • IRA catch up contribution limits will be indexed for inflation.
Changes to Qualified Charitable Distributions (QCDs)
  • QCDs can be used to make up to a $50,000 one-time contribution to a "split-interest" charitable gifting vehicle such as a Charitable gift annuity or a Charitable Remainder Trust
  • QCDs can be made at age 70.5 or older (no change from prior law)
  • The $100,000 QCD total maximum amount per year will be indexed for inflation
Penalty-free access to retirement funds for some persons such as:
  • Public safety worker with 25+ years of service can take distributions starting at age 50
  • Persons with terminal illness
  • Victims of domestic abuse
  • Federally-declared disaster victims
Higher limits for Qualified Longevity Annuity Contracts (QLACs)
  • Maximum lifetime premium limit increased to $200,000
  • The 25% of qualified account value limitation was eliminated
Penalties for missed RMDs was reduced
  • From 50% of amount missed to 25%
  • Further reduced to 10% if the problem is fixed promptly
Other Important Provisions
  • Large employers (> 10 employees) must adopt auto-enrollment to retirement plans (exceptions apply).
  • Starter 401(k) plans will be introduced. It is intended to be a simple, low-cost option for small companies to set up a qualified retirement plan for their employees.
  • Employers can contribute an amount to the retirement plan that matches the amount of student loan payments made by a participant.
  • Qualified plan assets can be used to pay long term care insurance premiums
  • Instructions to the Treasury Department intended to make it more attractive for companies to make annuity products available in qualified retirement plans in the future.

SECURE Act 2.0 is 300+ pages with about 100 provisions. Since it is "hot off the presses", numerous details will be "fleshed out" by the I.R.S. in the coming months. How the law may apply to your financial situation can be complicated. You should consult with a qualified financial, tax and/or estate planning professional before taking any action.

This article is for informational purposes and should not be construed to be financial advice. Note that Steven B. Goldstein and oXYGen Financial, Inc. do not provide tax or legal advice.

If you would like to receive more information on making smart money moves for your future, be sure to contact us today!


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About the author

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Steve B. Goldstein

Vice President, Private CFO®

Steve Goldstein is Vice President, Private CFO® with oXYGen Financial, Inc., and is based in Alpharetta, Georgia. Steve holds the Certified Financial Planner, Chartered Retirement Planning CounselorSM and Retirement Income Certified Professional® designations.

He is a 20-year veteran in the financial services industry and specializes in helping Baby Boomers and older Gen X'ers plan and manage their finances as they transition and live in retirement.

Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. oXYGen Financial is not affiliated with Kestra IS or Kestra AS. Kestra IS and Kestra AS do not provide tax or legal advice. Investor Disclosures: https://bit.ly/KF-Disclosures

The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Investment Services, LLC or Kestra Advisory Services, LLC. This is for general information only and is not intended to provide specific investment advice or recommendations for any individual. It is suggested that you consult your financial professional, attorney, or tax advisor with regard to your individual situation.

Background and qualification information is available at FINRA's BrokerCheck website.

Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.

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Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. oXYGen Financial is not affiliated with Kestra IS or Kestra AS. Kestra IS and Kestra AS do not provide tax or legal advice. https://Bit.ly/KF-Disclosures

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