Retirement Savings Opportunities Under Secure 2.0 Act

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The SECURE 2.0 Act was signed into law on December 29, 2022.  The new law further enhances the retirement savings incentives built into the Secure Act passed in 2019.  Here’s a summary of the provisions most likely to help you.

Increased Age for Required Minimum Distributions (RMDs)
The age when you must start to take RMDs from traditional retirement accounts increases to 73 in 2023.  The age increases to 75 in 2033.  In short, if you were born 1951-1959, RMDs are delayed until age 73.  For those born after 1959, the age will be 75.Those nearing retirement age can plan on relying on their taxable accounts longer.  Further, they can make bigger contributions later into their working years with the knowledge that the contributions can grow even longer on a tax-deferred basis.

Catch-Up Contribution Changes
Increased amounts can be contributed to retirement plans by those over age 50.  For 2023, the catch-up contribution limit is $1,000 for IRAs and $7,500 for 401(k)s and other retirement plans that allow elective deferrals. The $1,000 IRA limit will be indexed for inflation starting in 2024. For 401(k)s, additional catch-up contributions will become available for employees who attain ages 60 to 63 during the year starting in 2025. For employees in that age group, the limit will increase to 150% of the otherwise applicable limit for 2024. So, if the 2024 inflation adjustment increases the catch-up contribution limit to $8,000, the Age 60-63 catch-up contribution will be $12,000 in 2025.

Also, all catch-up contributions by individuals with compensation over $145,000 must be made to Roth accounts on an after-tax basis.  For most high earners, that should be a useful requirement.  Since the income tax has already been paid on Roth contributions, there is no further income tax on qualified withdrawals.  Further, there are no required lifetime RMDs, and your beneficiaries will make income-tax-free withdrawals.  Consider opening up a Roth account now to start the clock on the 5-year period required for tax-free withdrawals.

529 Plan to Roth IRA Rollovers Allowed
529 Plans to save for a child’s education have become increasingly popular.  Earnings generated by the after-tax contributions are tax-free if withdrawn for qualified educational expenses.  But what if a child does not use the full account for education purposes? Generally, 529 Plan withdrawals not used for educational purposes are subject to federal and state income tax plus a 10% penalty.  Under the SECURE 2.0 Act, there is another option starting in 2024 – rollover to a Roth IRA.  The annual contribution cannot exceed the annual Roth IRA contribution limit (currently, $6,500).  The 529 Plan must have been open for at least 15 years, and there is a lifetime limit of $35,000 per 529 Plan beneficiary.  This provision addresses the problem that people were reluctant to make 529 Plan contributions out of concern about taxes and penalties on unspent funds.

Matching Contributions for Student Loan Payments
Many employers provide matching contributions to employees who make contributions to 401(k) and similar plans.  Employees with unpaid student loans have to choose between saving for retirement and paying down their student loan.  Under the SECURE 2.0 Act, employers can offer employees the opportunity to do both starting in 2024.

Here’s an example of how it works.
A company hires a young employee with a substantial student loan debt.  The company already matches 401(k) contributions of up to 3% of the employee’s compensation.  But the employee’s student loan obligations prevent him or her from making a 401(k) contribution.  Under the SECURE 2.0 Act, when the employee pays down the student loan, the employer can then provide the same matching contribution to the employee’s 401(k) account as if he or she had deferred the amount of his or her student loan payment into his or her 401(k) account.
This seems to be a valuable incentive that many employers will want to offer to young employees.The details of the program will emerge this year, and it remains to be seen just how many employers will offer this benefit.

Other SECURE 2.0 Act Retirement Plan Enhancements Include:

  • $100,000 Qualified Charitable Deduction (QCD) in satisfaction of annual IRA RMD.
  • Up to $50,000 of QCD can be used to fund charitable trust or charitable gift annuity.
  • Reduction of Penalties from 50% to 25% for failure to take RMDs.
  • Further reduction of penalty to 10% through new self-correction procedure.
  • Extended payout from retirement plan over lifetime of disabled beneficiary of special needs trust (SNT) allowable even if a public charity is remainder beneficiary.
  • Searchable database to be known as Retirement Savings Lost and Found to be established by 2025.

There are many other favorable tweaks to the current rules that provide retirement savings incentives.

Contact us for more information about the SECURE 2.0 Act and to discuss your retirement and estate planning. Greg Pond and Donna Turetsky co-chair the Trusts and Estates Practice Group at Certilman Balin. The team assists clients in every aspect of estate and tax planning, estate administration, probate law, litigation and elder law. Contact them at or You may also call 516.296.7000 and ask for Sandra Pendrick, Steven Sulsky or Lisa Hunter.