As part of the recent legislation passed, the Secure Act 2.0 aims to help Americans by making changes to retirement plans, college savings plans, and required minimum distributions (RMDs).

The Secure Act 2.0 was part of a larger bill which included $1.7 trillion on defense, domestic programs, aid for Ukraine and regulatory changes for certain industries.

Here are some changes that may apply to you:

Already in effect:

  • You can make Roth contributions to SEP and SIMPLE IRAs.
  • Employers can now match in Roth dollars. Previously, if you elected to contribute to your Roth 401k, your employer still matched in pre-tax dollars. Now, your contribution AND your employers contribution can both be made after-tax.
  • The age in which you must start taking Required Minimum Distributions (RMDs) increased to 73 and will raise again to 75 in 2033. If you turned 72 in 2022, you must continue taking your RMDs as scheduled.
  • The penalty for failing to take your RMD has lowered from 50% to 25% and is reduced to 10% if you make sure to take the RMD and submit a corrected tax return in a timely manner.

Beginning in 2024:

  • Roth 401ks no longer have RMDs.
  • Employers are able to match the amount you pay on student loans into your 401k (and can make it in pre-tax or Roth dollars). This means that if you pay $400 a month, for example, your employer is able to contribute $400 to your 401k.
  • If you have a personal or family emergency, you will be able to take up to $1,000 per year from your 401k without paying a penalty. You may repay the amount withdrawn to be able to use this feature yearly, otherwise, you must wait 3 years before having access to another $1,000. Keep in mind that you are still taxed on the withdrawal.
  • IRA catch-up contributions will be indexed to inflation, meaning as inflation increases, so will the contribution limit.
  • 529 College Savings Plans that have been established for at least 15 years may be rolled into a Roth IRA, up to a maximum of $35,000. This is subject to Roth contribution limits, so if your child has $10,000 left in their 529, they are able to move $6,500 per year into a Roth IRA. This will help avoid the 10% penalty that some people take when they cash out their 529 plan.

Beginning in 2025:

  • Employees who are 60-63 will be able to make catch-up contributions to 401ks and SIMPLE IRAs equal to the greater of $10,000 or 50% of the current catch-up provision. This catch-up limit will be indexed to inflation, meaning as inflation increases, so will the catch-up provision.
  • Employees will be auto-enrolled into their companies retirement plan with at least a 3% contribution. This contribution will be set to increase each year by at least 1%. Participants are able to opt out. This may help some people start saving earlier as they won’t have to go through an enrollment process and potentially put it off for an extended period of time. Employers are also able to incentivize saving by offering small gift card to those who choose to participate in their employer’s plan.

Not every impact was covered in this post, so if you’d like to find out more about the Secure Act 2.0 including sections specific to business owners, special needs trusts and ABLE accounts, charitable giving and other various nuances, please give me a call or send me an email and I’d be happy to share!


Patrick Cicchetti

Financial Advisor


Direct: 585.340.2241