SECURE Act 2.0: What Every Individual Needs to Know
You may have read about the SECURE Act 2.0 that passed in late December as part of the Consolidated Appropriations Act. This is the most extensive retirement plan legislation we have seen in years. The main objectives include increase the availability of retirement plans, help people save more, streamline retirement plan rules, and help individuals preserve income in retirement. The SECURE Act 2.0 has a plethora of provisions, some major and some minor; some mandatory and some optional; some retroactively effective and some won’t be effective for years to come. And some with unanswered questions.
Below are the provisions we believe to be the most impactful and it’s now time to begin planning. However, there is a lot more guidance we need from the IRS and Department of Labor before we can fully give analysis of the nearly 90 provisions and how they may impact you as an individual investor on a day-to-day basis. If you are a participant in an employer sponsored plan, guidance from record keepers and plan administrators is also required on how several provisions will be implemented.
Now it’s time to begin planning for provisions currently effective along with those slated for the coming years. Our list of the most impactful provisions listed by effective date is as follows.
Effective Immediately - 2023
• New exclusions to the 10% early withdrawal penalty – qualified disaster, qualified birth or adoption and terminally ill
• Employee may self-certify hardships
• Employers may permit Roth match
• Required Minimum Distributions (RMD) bumped to Age 73
• Simple and SEP Roth contributions allowed
Effective 2024
• Tax & Penalty Free Rollovers from 529 to Roth IRA – capped at $35,000 and account must be opened for 15 years.
• If earning > $145k, catch up contributions must be Roth (Note: a significant technical error in bill, if not fixed, would
eliminate the ability for 401(k) participants to make catch-up contributions in 2024. Treasury Department have been altered)
• IRA catch-up of $1,000 begins to index with inflation
• Employer may match student loan payments
• No RMD for Roth 401(k) and 403(b)
• Retirement Savings Lost and Found
• New exclusions to 10% early withdrawal penalty – Emergency Distribution of $1,000 AND Domestic Abuse
Effective 2025
• Catch up contributions increased for savers ages 60-63
Effective 2026
• New exclusions to 10% early withdrawal penalty – Qualifying Long Term Care Insurance Premiums
Effective 2027
• Refundable Savers Credit – max of $2,000 for low-income savers. Credit deposited into retirement savings.
Effective 2033
• RMDs bumped to Age 75
We continue analyzing the provisions and will share comments as guidance is received. In the meantime, please reach out if you have questions.
The tax and legal references attached herein are designed to provide accurate and authoritative information with regard to the subject matter covered and are provided with the understanding that Rose Street Advisors is not engaged in rendering tax, legal, or actuarial services. If tax, legal, or actuarial advice is required, you should consult your accountant, attorney, or actuary.
Rose Street Advisors does not replace those advisors.
Securities and Investment Advisory Services Offered Through M Holdings Securities, Inc. A Registered Broker/Dealer and Investment Adviser, Member FINRA/SIPC. Rose Street Advisors, LLC is independently owned and operated. File #: 5442889.1
Scott Higgins
AIF®, CFP®, CPFA® | Financial Advisor
Since 2012 at Rose Street, Scott has been responsible for helping the firm’s individual wealth management clients with income strategies for retirement and consulting with employers with their employee retirement plans. In free time, he enjoys golf, biking, skiing, cooking, and traveling. Fun fact, Scott has a hobby of filling growlers with coins!
Jeremy Heavey
AIF® | Financial Advisor
Jeremy is passionate about partnering with individuals and families to identify what is important in their lives and creating a comprehensive financial strategy to help them reach their life goals. This holistic approach allows Jeremy and the wealth management team to ensure the specific needs of the client are front and center as they make investment recommendations and collaboratively design custom-tailored financial plans.
Jeremy has a professional track record starting, leading, and managing for-profit and non-profit organizations. He is a graduate of Taylor University and has completed business programs at both Hong Kong Baptist University & Harvard Business School. Jeremy is also formally trained and certified in behavioral assessment, conflict management and life coaching. Jeremy, his wife Kim and their 4 kids reside in Kalamazoo. They love spending time exploring the outdoors, fixing up their farmhouse, and living life with friends and extended family. Fun fact: Jeremy has been playing drums since he was 13 years old and made callbacks for the Blue Man Group.
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