SECURE 2.0 could affect your retirement and estate planning. Adler Pollock & Sheehan PC


The original Setting Every Community Up for Retirement Enhancement Act (SECURE Act), enacted in 2019, was a key piece of legislation related to retirement savings. In the spring of 2022, the U.S. House of Representatives passed legislation to ensure strong retirees, looking to reform that law. Despite strong bipartisan support, the bill stalled. The US Senate then introduced its own retirement law.

SECURE 2.0 incorporates the provisions of both bills and includes sweeping changes (some already in effect) to eligible plans and IRAs.


The first SECURE Act generally increased the age from 70½ to 72 at which people must begin taking the required minimum distribution (RMD) from traditional IRAs and other eligible plans. Those born after 1951 on January 1, 2023 are eligible. Also, from January 1, 2033, his age will be raised to 75, which applies to those born after 1959. This change allows you to delay receiving RMD and paying taxes.

The penalties for not receiving the RMD in a timely manner were severe. The previous law required you to pay 50% of the amount required (minus the amount actually withdrawn). SECURE 2.0 will reduce it to 25% of payments from 2023. Even better, if you pay within two years of the due date, the penalty is reduced to 10%.

Catch-up contribution

Tax law already encourages retirement savings for later life through “catch-up contribution” provisions in most defined contribution plans. Specifically, individuals over the age of 50 may make catch-up contributions up to specified annual limits in addition to their regular contributions.

For example, the regular 401(k) plan contribution limit for 2023 is $22,500. Also, catch-up contributions are capped at $7,500, with a maximum total of $30,000. But some retirement savers can increase their contributions further under SECURE 2.0.

The law also changes the taxation of catch-up contributions from 1 January 2024. This may reduce your up-front tax savings by maximizing your annual contribution. Catch-up contributions are treated as post-tax Roth contributions. Previously, you had the option to make your catch-up contributions on a pre-tax or post-tax basis. Exceptions are made for employees whose compensation is less than $145,000 (inflation index).

Additionally, beginning January 1, 2025, individuals between the ages of 60 and 63 will be eligible to make catch-up contributions to 401(k) and SIMPLE plans up to $10,000 or 50% more than the regular catch-up amount. You can do. The increase is linked to inflation from 2025 onwards.

Eligible Charitable Distribution

Special tax rules for Qualified Charitable Distributions (QCD) are available to individuals over the age of 70½. Simply put, you can send up to $100,000 directly from your IRA to a 501(c)(3) charity, tax-free. This means that transfers up to $100,000 are tax-free, but donations are not deductible. If you’re claiming standard deductions instead of itemizing, it doesn’t matter.

The $100,000 QCD limit applies to each individual. Therefore, couples can transfer up to $200,000 tax-free. Best of all, QCD counts towards her RMD duties.

Now, under the new law, you can also make one-time QCD transfers of up to $50,000 through charitable gift annuities or charitable residual trusts (rather than directly to the charity). The law also provides an inflation rate for the annual IRA charitable distribution limit of $100,000.

distribution of suffering

Generally, if you receive distributions from a qualifying plan or IRA before the age of 59½, you will be subject to tax penalties, unless you are subject to special tax law exceptions (such as disability distributions). The penalty equals his 10% of the amount withdrawn, in addition to normal income tax on dividends.

However, after 2024, SECURE 2.0 will allow withdrawals of up to $1,000 per year without penalty for unforeseen or immediate financial needs related to personal or family emergencies. Distributions may be repaid within three years, and subsequent distributions are prohibited until repayment is made.

Finally, the new law will give plan participants the opportunity to contribute up to $2,500 to an Emergency Savings Account (ESA) beginning in 2024. Donations to ESA are made through Ross donations. The first four withdrawals per plan year are free of charge and unused amounts can be carried over.

review time

There are many changes in SECURE 2.0, so no time should be wasted reviewing your retirement and estate plans and amending them if necessary. A property planning advisor can help you understand what needs to be fixed.


Below are some additional key provisions of SECURE 2.0 not covered in the main article.

  • A plan participant’s surviving spouse may elect to be treated as an employee for minimum distribution purposes.
  • With limited exceptions, employees must be automatically enrolled in eligible plans hired after 2024.
  • Employers may choose to provide matching 401(k) plan contributions based on their student loan obligations.
  • The Retirement Savers Credit will take effect after 2026 and will be replaced by a 50% government match of up to $2,000.
  • Unused funds in your Section 529 account can be carried forward into your Roth IRA up to a lifetime limit of $35,000 without tax or penalty.
  • Employers may offer small financial incentives (such as gift cards) to increase employee participation in retirement plans.
  • The government creates a “lost property” database of retirement accounts.

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