Key Points

  • RMD Age-Starting 1/1/23, the age for Required Minimum Distribution will be 73. In 2033, the RMD age will be 75.
  • RMD Penalty-The penalty for not taking out an RMD will decline to 25% of the RMD amount and 10% if corrected in a timely manner.
  • 401k Roth RMD-Starting in 2024, RMDs will no longer be required from Roth employer retirement plan accounts.
  • 529 Accounts to Roth IRAs-After 15 years, 529 plans will be allowed to rollover tax-free to Roth IRAs, with restriction. The total amount in aggregate is $35,000.
  • Emergency Savings- Defined contribution Roth plans will be able to add an emergency savings account where contributions would be limited to $2,500 annually (or lower, as set by the employer) and the first four withdrawals in a year would be tax and penalty-free.
  • Catch-Up Contributions-Starting in 2024, the 401k catch-up contribution will be increased to ages 60-63 to $ 10,000 for individuals making over 145K.
  • Employer-matching Contribution-Employer matching contributions will be allowed to be Roth. Moreover, SEP and SIMPLE IRA will now be able to be Roth.
  • Student Loan Matching-Starting in 2024, employers will be able to match student loan payments with retirement contributions, which will help younger investors to begin saving for retirement.

Required Minimum Distribution (RMD) Changes

The SECURE Act of 2019 raised the age for RMDs from 70½ to 72. SECURE 2.0 further raises the RMD age from 72 to 73 in 2023 and 75 in 2033.

If the account owner turned 72 in 2022 or earlier, he/she will still need to continue taking RMDs as scheduled. If the owner is turning 72 in 2023 and has already scheduled withdrawals, he/she has the option to update the retirement account withdrawal plan.

Starting in 2024, Roth accounts in employer retirement plans will be exempt from RMD requirements.

And beginning immediately, for in-plan annuity payments that exceed the participant’s RMD amount, the excess annuity payment can be applied to the year’s RMD.

Additionally, SECURE 2.0 reduces the penalty tax for failures by an individual to take the minimum distribution from 50% to 25%. Further, if the failure is corrected in a timely manner, the excise tax is reduced from 25% to 10%. Please consult a qualified tax advisor for more about this. These changes are effective for 2023.

529 Plans and Retirement Savings

Beginning in 2024, excess assets in a 529-qualified tuition program will be eligible for a tax-free rollover to a Roth IRA. The beneficiary of the 529 account and the Roth IRA must be the same, and the 529 account of the beneficiary must have been maintained for at least 15 years.

The rollover will be subject to the lesser of (1) the regular Roth IRA limits (without the income limits) or (2) the aggregate amount contributed to the 529 account over the previous five years (including earnings).

The rollovers are subject to a per-beneficiary lifetime limit of $35,000.

Emergency Savings Provision

SECURE 2.0 enables emergency savings accounts to be created within 401(k) plans, which will allow employees to save for emergencies and make withdrawals without penalty.

Additionally, there is a provision that will no longer subject emergency distributions from retirement plans (excluding Defined Benefit plans) or IRAs to the 10% early distribution tax.

There will be a limit of one emergency distribution per year and that distribution cannot exceed the lesser of $1,000 (not indexed) or the excess of the individual’s vested benefit over $1,000 (not indexed).

Only employee contributions can be made towards the emergency savings account; however, employers must match the contributed amount into the standard portion of the plan, not the emergency savings account, at the same rate they match regular contributions to the plan.

This provision is effective for 2024.

Catch-up Contribution Increase

There are two significant changes to catch-up contributions included in SECURE 2.0. First, effective in 2024, all catch-up contributions for individuals earning more than $145,000 per year (indexed) must be made on a Roth, or after-tax, basis. This does not apply to SIMPLE plans.

Second, individuals between the ages of 60 and 63 will be eligible for a higher catch-up contribution limit beginning in 2025. Current law limits catch-up contributions to $7,500 (except for SIMPLE plans, which limit to $3,500).

Under SECURE 2.0, effective in 2025, individuals will be able to contribute the greater of $10,000 (indexed) or 150% of the regular catch-up (which would be $11,250 in 2023). For SIMPLE plans, individuals will be able to contribute the greater of $5,000 or 150% of the regular SIMPLE catch-up (which would be $5,520 in 2023).

If you earn more than $145,000 in the prior calendar year, all catch-up contributions at age 50 or older will need to be made to a Roth account in after-tax dollars. Individuals earning $145,000 or less, adjusted for inflation going forward, will be exempt from the Roth requirement and can make pre-tax catch-up contributions.

IRAs currently have a $1,000 catch-up contribution limit for people age 50 and over. Starting in 2024, that limit will be indexed to inflation, thus it could increase every year given federally determined cost-of-living increases.

Student Loan Debt

Starting in 2024, employers will be able to “match” employee student loan payments with matching payments to a retirement account, providing an incentive for younger workers to build retirement savings while paying off student loans.

Beginning in 2024, employers will be permitted to make matching contributions under a 401(k), 403(b), or SIMPLE IRA plan based on a participant’s student loan repayments. Government employers would also be permitted to make matching contributions in section 457(b) plan or another plan with respect to such repayments. Both provisions are effective for 2024.


There are many changes to the Secure Act with the release of Secure Act 2.0. Keeping up with these changes can ensure you are taking full advantage of all the opportunities the government provides you.

Having a successful financial plan depends on the most current tax, retirement, and savings laws. Without them, you could miss key opportunities to maximize your benefits.

If you have additional questions about Secure Act 2.0, click here to schedule a one-on-one 30-minute introductory meeting.

The opinions voiced are for general information only and are not intended to provide specific advice or recommendations for any individual.

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