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  • Eric Walter, CFP®

Secure Act 2.0 - What you NEED to know

Just prior to Christmas, Congress passed an important piece of legislation addressing the continued need to improve retirement savings - the SECURE 2.0 Act of 2022. The bill includes new provisions as well as some that build off the original 2019 SECURE Act. Some of the financial planning highlights are below*:

  • Required Minimum Distributions (RMDs) will be delayed to 73 (currently 72) for those who turn 72 after 12/31/2022;

  • RMDs will be further delayed to 75 for those who turn 74 after 12/31/2032;

  • Indexing (adjustment for inflation) will be added to the annual IRA catch-up limit and annual Qualified Charitable Distribution (QCD) limit in 2024;

  • Spousal IRA beneficiaries will be given an additional option to be treated as the decedent for RMD purposes beginning in 2024;

  • Option to receive employer retirement plan contributions (matching or nonelective) on a Roth basis for employees of defined contribution plans added upon enactment;

  • High earners (>$145,000 in prior year wages from the plan sponsor) will be required to use a Roth option for catch-up contributions beginning in 2024. Additionally, the age 50+ annual catch-up limit for company retirement plans will increase for ages 60, 61, 62, & 63 to the greater of (a) $10,000 or (b) 150% of the regular catch-up contribution limit beginning in 2025;

  • 529-to-Roth IRA transfers will be allowed (open for 15+ years and to same beneficiary) beginning in 2024. There are several other caveats including an annual limit equal to the IRA contribution limit and a $35,000 lifetime maximum;

  • National online searchable lost and found database for retirement plans will be created at the Department of Labor within two years of enactment;

  • Several other changes to employer retirement plans making them easier to operate, more cost effective, and providing better access for hardship cases.

*Please consult your tax preparer or CPA for eligibility and guidance on your specific situation or for information on additional provisions.

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