SECURE Act 2.0: Summary of Different Changes

In this vlog, I will provide a summary of the key changes introduced by the SECURE Act 2.0 law I mentioned throughout this year. You can find all the vlogs about t hose changes on our website. 

1. 1. Required Minimum Distribution (RMD):
      • RMD starting age changed to 73 for those turning 73 between 2023-2032.
      • For those turning 73 in 2033 and beyond, RMD starts at 75.
      • Penalty for missed RMD reduced from 50% to 25%, potentially waived under specific conditions.
   2. 529 Plan Rollovers to Roth IRAs:
      • Beneficiaries can roll over up to $35,000 from 529 plans to Roth IRAs during their lifetime.
   3. Expanded Roth Contributions:
      • Employers can now allow contributions of employer matching and non-elective contributions to Roth accounts. However, it would be taxable to the employee.
   4. Elimination of RMDs for Roth Accounts within Employer Retirement Plans:
      • RMD obligation removed for employer retirement plan Roth accounts.
   5. Catch-Up Contributions:
      • Increased catch-up contribution amounts for those over 50.
      • Starting in 2026, those earning over $145,000 must make catch-up contributions to after-tax Roth. (Note: our previous vlog said it would start 2024 but the US Treasury delayed to 2026)
   6. ABLE Account:
      • Eligibility expanded; anyone disabled before age 46 can open an ABLE Account from 2026 onwards.
   7. Expand 401(k) and 403(b) Automatic Enrollment:
      • Automatic enrollment required for new plans starting in 2025.
      • Exception for small businesses, new businesses <3 years old, churches, and governmental plans.
   8. Annuities in 401(k) Plans:
      • SECURE Act 2.0 allows inclusion of annuity options in plans, with changes to regulations.
      • Qualified Longevity Annuity Contract (QLAC) Contributions increased to $200,000.
   9. Student Loan Matching Program:
      • Employers can make matching contributions based on employee’s student debt repayments to encourage retirement savings.
   10. Retirement Savings Lost and Found Database:
       • The U.S. Department of Labor is directed to create a national online lost and found database for locating retirement accounts.

Have questions about the SECURE Act 2.0 changes? Feel free to reach out anytime—we’re here to help and discuss!