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Retirement Ready: What You Need To Know About The Secure Act 2.0

by Nicole Phillips, CFP® | April 3, 2023

The Secure Act 2.0 was signed into law in late December 2022 and builds upon the earlier "Setting Every Community Up for Retirement Enhancement" (SECURE) Act of 2019. This legislation enacts dozens of retirement-related provisions for employees and employers alike.

The Secure Act 2.0 empowers individuals to save for retirement, improves the rules surrounding retirement, and lowers the cost of setting up a retirement plan for employers. 

One of the most significant changes in Secure Act 2.0 is the expansion of automatic enrollment in 401(k) plans. Starting in 2025, new plans will automatically enroll eligible employees in a company’s 401(k) plan unless they expressly opt out. 

Businesses with ten or fewer employees, government plans, church plans, and new businesses that have been in business for less than three years are exempt from this auto enrollment.

The legislation also increases the age for required minimum distributions, allowing retirees to keep their funds invested for longer.  Starting in 2023, the threshold age to determine when individuals must begin taking required minimum distributions will increase from age 72 to 73.  By 2033, the threshold age for RMDs will be age 75.

The Secure Act 2.0 introduces new retirement catch-up contribution limits for American workers.  Catch-up contributions allow individuals who are 50 or older to save more money in IRAs and 401(K)s.  For 401(k)s, a new category of catch-up contributions has been created for workers aged 60 to 63.  Starting in 2025, the workers in this category will have a catch-up contribution limit of the greater of $10,000 or 150% of the standard catch-up contribution limit.  Starting in 2024, the $1,000 catch-up contribution for IRAs will be adjusted annually for inflation.

The Secure Act 2.0 will allow tax-free transfers of funds from 529 college savings accounts to Roth IRAs. This would enable families to transfer unused funds from a 529 account to a Roth IRA, which could be used for retirement savings. Currently, these transfers are subject to taxes and penalties.

The above just scratches the surface on a few selected provisions of the Secure Act 2.0.   For more information, please reference the Secure Act 2.0.


This commentary contains general information that is not suitable for everyone. The information contained herein should not be construed as personalized investment advice. Past performance is no guarantee of future results. There is no guarantee that the views and opinions expressed in this commentary will come to pass. Investing in the stock market involves gains and losses and may not be suitable for all investors. Information presented herein is subject to change without notice and should not be considered as a solicitation to buy or sell any security.

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