About The SECURE Act 2.0

We hope the New Year is off to a good start for you and your family.

At the end of December Congress passed the SECURE Act 2.0 that may have tax and financial planning implications for your finances. (They always like to slip in tax legislation at the very end of the year!). Without getting too low in the weeds, here are some high level points:

  • Required minimum distributions have increased to age 73 for those born between 1951-1959. Those born in 1960 or later will not need to begin RMDs until age 75. If you began taking RMDs in 2022 (because you turned 72), then you must continue distributions this year. However, if you turn 72 this year in 2023, you do not need to take a distribution until 2024.
  • For those doing charitable distributions from their IRAs, these new rules do not affect that. An individual may still contribute directly to a charity from their IRA beginning in the year they turn 70 ½.
  • Employers may make Roth contributions to your 401(k) or 403(b) now. Notably, the employer’s matching contribution would be included on the employee’s W2.
  • A portion of 529 accounts may be transferred to Roth IRAs, though there are several restrictions:

– The Roth IRA must be in the name of the beneficiary of the 529 (whether the beneficiary can be changed is yet to be clarified);
– You must have maintained the 529 account for at least 15 years;
– Contributions to the 529 from the previous 5 years are ineligible to be transferred;
– The amount transferred in a single year cannot exceed the Roth IRA annual contribution limits; and
– The maximum amount that can be transferred in an individual’s lifetime is $35,000.
– Still, even with these restrictions, some planning opportunities are opened for folks who would like to jumpstart their childrens’ retirement savings while reducing a bit of their state income tax liability each year.

  • Backdoor Roth contributions have not been removed under this new legislation (yay!)

As we meet this year we will go in-depth with the provisions of the SECURE Act 2.0 to examine how they affect and if there are planning opportunities for your finances.

Best Regards…Rachel, Mark, & Jim

Scroll to Top