SECURE Act 2.0 Highlights

Kirk Kreikemeier |

There are many laws and IRS guidelines that govern contributions to and withdrawals from retirement savings accounts.  Annual IRA contribution limits and required minimum distributions (RMD) are two examples.  SECURE Act 1.0 was passed in December of 2019 and included many changes including delaying RMD age to age 72 and reduce the time an IRA beneficiary must withdraw funds to 10 years in most cases.  This latest act modified some features of 1.0 and added others.  Some provisions are effective for 2023, others delayed until 2024 or 2025, and even one feature – extending RMD age to 75 – is delayed until 2033!

Some new features you might like (watch the effective dates!):  RMD delayed to age 73, 401k emergency fund, a portion of excess 529 funds for Roth IRA, extra catch-up contributions for age 60-63, Roth option in SIMPLE and SEP, and a larger QLAC amount if want to nerd out with me.

Here are the key features for individuals and businesses.  Given the many changes to summarize and the further complexities around each topic, I will limit this blog post to bullet points.  Each major bullet point could be a topic for a stand-alone blog post!  For those wanting to see the actual text, here is a link to the year-end spending bill; SECURE Act 2.0 starts on page 2,046.  Note:  I also referenced materials from Charles Schwab and Jeffrey Levine but any oversights are my responsibility.


  • No change to age 70.5 for Qualified Charitable Distribution (QCD) from IRAs
  • Did NOT clarify the 10-year Beneficiary IRA RMD rules; wait for further IRS guidance
  • No limits to the Backdoor Roth or Mega Backdoor Roth strategies

Effective 2023 for Individuals

  • Required Minimum Distribution (RMD) starts at age 73 (extend to 75 in 2033)
    • Was age 72 (extended from 70.5 in SECURE Act 1.0)
    • If turned 72 before 1/1/2023 you are subject to old RMD rules
  • Reduce penalty for missed RMDs
    • Reduced from 50% down to 25%; down to 10% if oversight fixed timely
    • Always have option to file Form 5329 to request waiver of penalty for good cause
  • Increased amount eligible for Qualified Longevity Annuity Contract (QLAC)
    • Allows purchase of income annuity that starts at advanced age inside an IRA
    • Amount used to purchase longevity annuity is not subject to RMD
    • Repealed the 25% limit; maximum purchase allowed is $200,000 (was $145k in 2022)
  • Relaxed some IRA withdrawal rules without incurring 10% penalty before age 59.5
    • Disaster recovery (up to $22k lifetime), expanded “terminal illness”, relax some 72(t)
    • Eliminate 10% penalty on earnings from excess contributions, but still taxable
  • One-time ability to fund split-interest trusts with QCDs, up to maximum of $50,000
    • Charitable Remainder UniTrust and Annuity Trust are two examples

Effective 2024 for Individuals

  • No RMDs for Roth 401k
    • RMDs were never required for Roth IRAs but they were for Roth 401k
    • NOTE – RMDs ARE REQUIRED for Beneficiary Roth IRAs
  • IRA catch-up contribution limits indexed to inflation in $100 increments
    • Those age 50+ currently can contribute extra $1,000 to IRAs
    • This amount was in place for some time and previously not automatically adjusted
  • 401k catch-up contributions must go into Roth 401k if wages > $145,000
    • Based on previous year wages from that employer; can avoid if switch jobs
    • If 401k plan doesn’t have Roth 401k option won’t be able to make catch-up… interesting
  • Roth 401k Emergency Fund
    • Can contribute up to $2,500 in total (highly compensated not eligible)
    • Must be held in cash-like instruments
    • Distributions are “qualified” so avoid 10% penalty but still taxed on earnings
  • Excess savings in 529 – up to $35,000 - can be used for Roth contributions to beneficiary
    • 529 account must have been open for at least 15 years in the same beneficiary name
    • Can not use contributions or related earnings from previous 5 years
    • Beneficiary must have taxable compensation, still subject to annual IRA limit in total
    • However, not restricted by Roth contribution income limit
  • Maximum $100,000 allowed for Qualified Charitable Distribution (QCD) indexed to inflation
    • Allows age 70.5+ to make donation to charity from IRA; counts in RMD but not taxable
    • Yes charitable is deductible item but many no longer itemize due to larger standard
    • Also reduces income “above the line”, potentially reducing Medicare premium surcharge
  • Surviving spouse can choose decedent’s age for RMDs
    • Benefit if survivor is older – either delaying start of RMD or using lower factors
  • Relaxed more IRA withdrawal rules without incurring 10% penalty before age 59.5
    • Victims of domestic abuse (up to $10k or 50% of balance)
    • $1,000 emergency withdrawal exception, with some caveats

Effective 2025 or later for Individuals

  • Extra catch-up contribution for those age 60 – 63 starting in 2025
    • For 401k, limited to $10,000 or 150% of regular catch-up that year; using 2023:  $7,500 x 1.50 = $11,250
    • For SIMPLE IRA, limited to $5,000 or 150%; using 2023 value:  $3,500 x 1.50 = $5,250
  • IRA withdrawal without penalty to cover Long-Term Care insurance premiums starting 12/29/25
    • Limited to lesser of $2,500 or 10% of balance
  • Expand ABLE account eligibility to person disable before age 46, not current 26, starting in 2026
  • ETFs can be used in variable life and variable annuities starting 12/29/2029
  • RMD at age 75 starting in 2033

Effective 2023 for Businesses

  • Employer can make matching contributions to Roth if participant wishes
    • Amount would be included as gross income for participant
  • Can have Roth option in SIMPLE and SEP plans
    • Effective now but custodians may not be ready
  • Sole proprietor with new plan can make salary deferral for prior year
    • Only for plan years of 2023 and later; contribute by tax filing deadline, not extension
  • Enhanced tax credits for setting up 401k plan for smaller employers

Effective 2024 or later for Businesses

  • Additional SIMPLE IRA employer contributions starting 2024
    • Beyond required match, up to lesser of $5,000 or 10% of compensation
  • Employer can match participants’ student loan payments as if was salary deferral starting 2024
    • Matching and vesting schedule must be same as regular salary deferral
  • Mandatory Auto Enrollment starting 2025 (participant can opt out)
    • Initial rate from 3% - 10%; auto increase 1%/year until 10% - 15%
    • Plans exempt:  existing, govt, church, under 10 employees, SIMPLE

Wow!  There are many benefits to utilize tax-qualified savings for retirement but the rules don’t get any easier.  As daunting as this list may seem, I encourage you to utilize these plans to fit your circumstances.  Reach out for help to maximize the benefits available and strategies to employ.  You have plenty of options!


Posted by Kirk, a fee-only financial advisor who looks at your complete financial picture through the lens of a multi-disciplined, credentialed professional.