How the SECURE 2.0 Act Affects You

December 15, 2023

Posted in Retirement

This article was originally published on February 20, 2023, and updated on December 15, 2023.

The last few years we saw a variety of laws passed regarding taxes, retirement, and pandemic relief. The most recent iteration is the SECURE 2.0 Act, signed into law at the end of 2022, with several changes already in effect as of 2023.

The original “Setting Every Community Up for Retirement Enhancement” (SECURE) Act was passed in 2019 and was most notable for upping the Required Minimum Distribution (RMD) start date from age 70½ to age 72 for those with an IRA or similar retirement plan.

SECURE 2.0 features yet another change to the RMD age. For those turning 72 in 2023, their RMD now begins at age 73, meaning they’ll have to begin distributing  from their IRA in 2024.

Below is a summary of other prominent changes , based on your current stage of life:

Retired (or close to it)

As mentioned previously, Secure 2.0 once again raises RMD age for those with IRAs. Here is a quick reference to see what RMD age applies to you:

  • Born before July 1, 1949: age 70 ½
  • Born between July 1, 1949 and December 31, 1950: age 72
  • Born between January 1, 1951 and December 31, 1959: age 73
  • Born after January 1, 1960: age 75

SECURE 2.0 also reduced the penalty for not meeting your RMD from 50% of the amount not taken down to 25%. In fact, if you rectify the mistake quickly and submit a corrected tax return the penalty can be reduced to 10%.

One additional change of note for those near retirement is the increase to “catch-up” contributions to employer retirement plans.

  • For 2023, the catch-up limit is $7,500 and is available to anyone 50 or older. It will remain $7,500 in 2024.
  • Starting January 1, 2025, the catch-up limit for those ages 60-63 will jump to $10,000 and will be indexed to inflation moving forward.
  • However, if you make over $145,000, the catch-up must go into a Roth account with after-tax dollars. NOTE – this has been delayed until 2026 to give ample time for employers to update their retirement plan documents and internal accounting to accommodate this change.

Early or mid-career

SECURE 2.0 has notable updates to regulations affecting early and mid-career workers in addition to those in or near retirement.

  • Businesses starting new 401(k) and 403(b) plans will be required to automatically enroll eligible workers at a 3% deferral rate starting in 2025 (unless employees specifically opt out).
  • There is also an effort to reduce retirement plan “leakage” by allowing for easier portability of retirement accounts between employers. This may be especially helpful for those with smaller balances that often cash out their account (or forget about it) rather than roll it to their new employer.
  • Starting in 2023, employers may permit employees to elect to receive matching contributions and non-elective contributions  into a Roth account rather than a traditional, pre-tax account.
  • A new provision now allows employer-sponsored retirement plans to add an emergency savings account for their participants, starting in 2024. This would be in the form of a designated Roth account and contributions would be capped at $2,500 and only available to non-highly compensated employees.

The last two changes we’ll mention deal with student loans and 529 plans, a type of college savings account.

  • Starting in 2024, employers can match the amount an employee pays toward student loans into their retirement account, helping them save while they pay down their debt.
  • Unused 529 plan balances will have the option to be rolled into a Roth IRA for the 529 plan beneficiary if the account has been open for 15 years. This begins in 2024 and is subject to annual Roth IRA funding limits, with a max rollover of $35,000 allowed over a five-year period.

Talk to your financial planner

While we covered  several notable changes brought on by SECURE 2.0, there are additional nuances, guidelines, and restrictions that apply. Other changes affect the catch-up contribution limits, Qualified Charitable Distributions (QCDs), and the Saver’s Credit, to name a few. Click here for more in-depth analysis on several of these changes.

If you’re wondering which changes might impact you or your family’s financial plan, reach out to your financial planner.

Not a client of Johnson Bixby? If this article spurred questions about your financial situation and  planning, we’d love to have a conversation to see whether we’re a good fit to partner with you on your financial journey. Call us at 360-695-1795 to schedule time.


Secure Act 2.0, Senate Finance Committee

Fidelity Institutional

Sean Mullaney, Financial Planner, @SeanMoneyandTax

Charles Schwab Asset Management


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