Secure 2.0: Enhancing Retirement Security and Expanding Opportunities for Individuals with Disabilities

We are excited to share with you the latest developments in retirement planning and financial security. A new law has been signed that aims to empower Americans to save more effectively for their retirement, introducing significant changes to retirement plans. The Setting Every Community Up for Retirement Enhancement 2.0 Act (SECURE 2.0) builds upon the original SECURE Act of 2019, implementing crucial modifications to various retirement provisions, including the required minimum distribution (RMD) rules. In addition, SECURE 2.0 brings about changes to Achieving a Better Life Experience (ABLE) accounts, benefitting disabled taxpayers.

Let's delve into the key highlights of SECURE 2.0 and explore when these provisions will come into effect:

1. Raising the Age for Beginning RMDs: Under the new law, the age at which RMDs must commence will gradually increase. Starting on January 1, 2023, the distribution age will rise from 72 to 73. Furthermore, on January 1, 2033, it will be raised again to age 75. This adjustment provides individuals with more flexibility and additional time to grow their retirement savings.
   
   
2. Enhanced "Catch-Up" Contributions for 401(k) Participants: Participants in certain retirement plans who are aged 50 and older are currently eligible to make catch-up contributions. SECURE 2.0 further enhances this provision by raising the catch-up contribution limit for 401(k) plans. Starting in taxable years beginning after December 31, 2024, individuals aged 60 through 63 will be able to contribute the greater of $10,000 or 150% of the regular catch-up amount. These higher limits will be indexed for inflation after 2025. Similar catch-up increases will also apply to SIMPLE plans.
   
   
3. Tax-Free Rollovers from 529 Accounts to Roth IRAs: SECURE 2.0 introduces an exciting opportunity for beneficiaries of 529 college savings accounts. After December 31, 2023, beneficiaries will be allowed to make direct trustee-to-trustee rollovers from their 529 accounts to Roth IRAs without incurring any tax or penalty. However, specific rules govern this rollover process, and we encourage you to seek guidance to ensure compliance.
   
   
4. Matching Contributions for Employees with Student Loan Debt: Recognizing the financial challenges faced by employees repaying student loans, SECURE 2.0 permits employers to make matching contributions to retirement plans for individuals making "qualified student loan payments." This provision enables employees burdened by student loan debt to receive employer matching contributions, even if they are unable to contribute to their own retirement accounts. This provision will take effect after December 31, 2023, offering relief to those striving to balance their retirement savings and student loan obligations.

These changes in SECURE 2.0 are just the tip of the iceberg, as the law includes numerous additional provisions aimed at bolstering retirement security. If you have any questions regarding your specific circumstances, we encourage you to reach out to your HoganTaylor Wealth advisor for personalized assistance.

We hope you find these updates informative and relevant to your financial goals. As always, please don't hesitate to contact us if you have any questions or require further assistance.

HoganTaylor Wealth

HoganTaylor Wealth provides an integrated approach to investment and financial planning and is a registered investment advisor and subsidiary of HoganTaylor LLP. HoganTaylor Wealth takes pride in serving clients as an independent fiduciary through holistic financial planning. Learn more at hogantaylor.com/wealth.

INFORMATIONAL PURPOSE ONLY. This content is for informational purposes only. This content does not constitute professional advice and should not be relied upon by you or any third party, including to operate or promote your business, secure financing or capital in any form, obtain any regulatory or governmental approvals, or otherwise be used in connection with procuring services or other benefits from any entity. Before making any decision or taking any action, you should consult with professional advisors.