On December 29, 2022, President Biden signed the Consolidated Appropriations Act of 2023.  That spending package included the 358-page Setting Every Community Up for Retirement Enhancement Act, also known as SECURE 2.0, which builds  on the first SECURE Act which was passed at the end of 2019. 

While the act contains a large number of provisions, the highlights for individuals are listed below:

  • The beginning date for Required Minimum Distributions was raised from 72 to 73 starting in 2023, and to 75 in 2033.
  • Families with leftover 529 money will be able to move it into a Roth IRA, effective 2024.  Recipient must have income at least equal to the amount rolled over, and the amount moved cannot exceed the allowed Roth Contributions for the year.   Other restrictions apply.
  • Employees with a 401(k) or 403(b) plan may choose whether to have employer matching or nonelective contributions be pre-tax or Roth.  Previously these contributions could only be pre-tax.  This begins with contributions made in 2023.
  • Roth 401(k) accounts will be treated the same as Roth IRA’s and no longer be required to take RMDs, beginning in 2024.
  • SIMPLE IRA’s can accept employee deferrals as Roth contributions effective 2023.  Previously SIMPLE deferrals could only be pre-tax.
  • Starting in 2024, employers will be able to “match” employee student loan payments with matching payments to a retirement account, giving workers an extra incentive to save while paying off educational loans.
  • Limits on retirement plan catch-up contribution will be increased starting in 2025.

Any questions about the impact of these changes or your savings strategies, or how you can best take advantage of the updated rules, please let us know and we can find a time to discuss!