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What is Secure Act 2.0?

What is Secure Act 2.0?

| May 31, 2023

The Secure Act 2.0 is a piece of legislation that builds upon the original Secure Act (Secure Act 1.0) and introduces additional changes to various retirement planning and savings aspects. Its purpose is to further enhance individuals' retirement security and promote better future financial preparedness. The Secure Act 2.0 introduces several significant updates to retirement plans, college savings, emergency savings, and more.

It has taken several months to navigate many provisions of this legislation passed into law on December 29, 2022. Many conditions included in this legislation were written in 130 pages and tucked inside the over 4000 pages of the Consolidated Appropriations Act of 2022. It will take much of the year to disseminate this information fully, but hopefully, this blog will address some of the highlights. Here are the "BIG" categories of changes embedded in this legislation.

  1. Changes to the RMD (Required Minimum Distribution) age
  2. Changes to Retirement Plans
  3. Changes to College Savings/Student Loans
  4. Changes to Emergency Savings and Distributions

 Let's highlight a few in more detail:

RMD Changes
Regarding the RMD age, Secure Act 1.0 increased the RMD age to 72. Secure Act 2.0 raised the RMD age to 73 for individuals born after December 31, 1950, and individuals born after December 31, 1959, will not have to begin RMDs until they reach the year they turn 75 or 2033. These adjustments provide individuals with more flexibility and additional time to grow their retirement savings before being required to take distributions. 

Individuals previously obligated to take distributions are still required under the Secure Act 2.0. However, the legislation includes provisions that aim to reduce the penalties for failing to meet these distribution requirements. Failure to take your RMD is lowered to 25% from the previous 50%. Additionally, if a missed RMD is corrected within two years, the penalty can be further reduced to 10%.

Retirement Plan Changes
There are too many changes to cover them all, but here are some takeaways. New plans and plans for smaller companies have a few more incentives to get started, including tax credits and starter options for companies to adopt. Additionally, there is language to have employers update their plans to have auto-increasing deferral options as the default option and employees needing to "opt-out" to save less. This legislation also widens the eligibility for part-time employees but limits the tax deductibility of catch-up contributions for individuals earning over $145,000.  Additionally, the rules are changing around top-heavy testing and extended plan set-up time for Solo 401k plans in their first year.

Changes regarding college planning
Saving for college continues to be at the forefront of new legislation. It allows folks repaying student loans to count that repayment as participation in the employer retirement plan. This allows for "matching" dollars to go towards the employee's retirement goals instead of missing out during the time loans are being addressed. In addition, 529 balances that have been established for 15 years and did not get used during college can be transferred to a Roth IRA. The limit is $35,000 total, and the amount that can be transferred annually is limited to the annual amount allowed as a Roth IRA contribution.  

As you can see, this legislation is packed full of changes. Hopefully, this helps you to understand some of the highlights and know that our team is working hard to communicate and advise as needed. Should you want to discuss any of these options further, please don't hesitate to contact us at or 816.792.5072.´╗┐

This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.