Secure Act 2.0

On December 29, 2022, the Secure Act 2.0 was passed into law, paving a way for more than 90 new changes to retirement savings and planning. These changes bring good news to retirement plan savers and for plan sponsors giving millions the opportunity to plan for a better future. 

Most of the new law’s provisions are not effective until January 1, 2024, or later. However, some optional provisions are effective immediately. 

Here is a timeline of events that will highlight some of the new law and explanations a financial advisor will need to know:

** Note that the effective dates of the new provisions vary. Some are effective immediately in 2023, others will begin over the next few years. 

What this means for you:  

Better Catch-Up Contributions: These bonus contributions are designed to help older workers who are behind on their retirement savings goals. 

Changes to RMDs: Will give more flexibility for taking RMDs but will also increase tax liability which can be viewed as a major pitfall to those who haven’t planned properly.  

Auto-enrollment: Old plans will be grandfathered in, but new plans will allow employees the opportunity to save more of their earnings and allow their assets to grow faster.  

Small businesses: Increased startup tax credits for businesses with 100 or fewer employees. 

Younger employees: Student loan payments can be elected for deferrals, allowing employees to pay debt down and build for their retirement.  

529 to Roth IRA Conversion: 529 accounts can be viewed as a game of chance. Who can predict the future actions of a child or what happens if the account grows too large. Under certain circumstances you can convert up to $35,000 saved into a Roth IRA with no penalties.  

With so many changes, these provisions can be complex. Education is important, but identifying specific opportunities and/or changes can help a financial professional meet their client’s retirement goals. 

Jerime Wyant

Compliance Team Manager