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  • Writer's pictureGeoff Wells

SECURE Act 2.0 - New Tax Legislation

Throughout 2022, Congress was debating a new bill that had been named the "SECURE Act 2.0" after the initial Setting Every Community Up for Retirement Enhancement (SECURE) Act from 2019. In 2019, the SECURE Act had many changes including increasing the age of RMDs from 70.5 to 72 and eliminating the "Stretch" IRA, now requiring most IRA beneficiaries to withdraw assets within a 10-year period. On December 23rd, the SECURE Act 2.0 was passed and signed into law. Below are the highlights of the changes for retirement accounts that we wanted to share:

  • The Required Minimum Distribution (RMD) age is increasing. For individuals born between 1951 and 1958, the new RMD age is 73. For individuals born in 1959 and beyond, the new RMD age is 75.

  • With the concern over unused 529 college savings plans, the SECURE 2.0 Act now allows a transfer of up to $35,000 from a 529 savings account to the beneficiary's Roth IRA. This allows parents/grandparents a reassurance that unused college funds will still go to benefit the beneficiary.

  • The legislation merges some of the nuanced Roth rules that differ between 401k/403b/IRA, eliminating RMDs for Roth features in all accounts.

  • SEP and Simple IRA employer retirement plan accounts can now have a Roth provision for after-tax contributions.

Overall, these changes are relatively small compared to the 2019 SECURE Act, but they still enhance the ability to implement multi-year tax planning and create new tools to transfer wealth in a tax-efficient way.

If you have any specific questions about the SECURE Act 2.0, please reach out to us.


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