Secure Act 2.0

Here are some of the highlights of Secure Act 2.0 as it relates to personal finances:

• Required Minimum Distribution (RMD) Starting Age Is Getting Pushed Back Again
  • In 2020, the Secure Act changed the starting age for RMD’s to age 72. Secure Act
    2.0’s new starting age will be 75–but there’s a phase in. Here’s what it looks like:

• RMD’s No Longer Required From Roth Employer Plans
  • Previously there were no RMD’s for Roth IRA’s, but you still had to take RMD’s
    from Roth 401k’s, Roth 403b’s, Roth 457’s, etc.
• New Roth SIMPLE and SEP IRA’s
  • Prior to Secure 2.0, Roth options were not available in SIMPLE and SEP IRA’s.
• Employers Can Now Make Roth Contributions
  • Prior to Secure 2.0, Employer matches and other contributions to employer
    plans were always traditional (tax deferred) contributions regardless of the
    employee’s contribution.
• Roth Catch Up Contributions For Wages Over $145K
  • For W–2 Employees, if you earn more than $145K the previous year and you are
    making catch up contributions, they will automatically be Roth contributions.
• Potential Ability to Transfer 529 Funds to Roth IRA’s
  • There is a $35K lifetime limit for these transfers and several other stipulations
    that must be met in order to allow this transfer to happen (529 must exist for 15
    years, etc.)
  • These transfers can start in 2024, but make sure you look up the rules to see if
    you would be allowed.
• IRA Catch Up Contributions Will Be Indexed For Inflation Each Year
  • Starting in 2024, the catch–up contributions for those over age 50 will be indexed
    for inflation in $100 increments
• Employer Plan Catch Up Contributions Will Increase For Ages 60–63
  • Starting in 2025, those who participate in Employer Retirement Plans and who
    are ages 60–63 will be able to contribute more than just the catch up
    contribution.
• Maximum Annual Qualified Charitable Distributions (QCDs) Will Be Indexed For
  Inflation
  • The annual amount for a QCD has been $100K for 15 years. Starting in 2024,
    QCD maximums will be indexed for inflation.
• RMD Penalties Reduced
  • Beginning in 2023, the penalty for not taking your RMD for the year is reduced to 25% (from 50%) AND there is a correction window so that you can correct your mistake and reduce the penalty even further to 10%.