Broker Check

The SECURE Act 2.0 Overview

| February 22, 2023

The SECURE (Setting Every Community Up for Retirement Enhancement) Act 2.0 (signed into law December 29th, 2022) builds upon its predecessor, The SECURE Act, initially passed in 2019. The SECURE 2.0 Act covers many updates to retirement plans as well as required minimum distributions with effective dates spanning the next several years. Below is an outline for each individuals and business owners covering some of the major provisions in the Act. Keep in mind, however, this is not intended to be a comprehensive overview of all the provisions of the bill.[i],[ii]

Items impacting individuals/employees:

The following provisions are effective in 2023:

  • The age at which Required Minimum Distributions (RMDs) begin from retirement plans has been pushed back from age 72 to 73 (for those turning 72 after 12/31/2022) and will increase to 75 in 2033 (for those turning age 75 in year 2033 or later). Penalties for missed RMDs have also been reduced.
  • Employees are now allowed to receive Employer contributions to retirement plans as Roth contributions. The contribution would remain tax deductible to the Employer and would be taxable as income to the Employee.
  • Qualified Charitable Distributions (or QCDs) which allow IRA owners over age 70 ½ to donate Required Minimum Distributions (RMDs) directly from their IRA to a qualified charity, was formerly capped at $100,000 annually, but will be indexed for inflation beginning in 2024.

The following provisions are effective in 2024:

  • Beginning in 2024, the $1,000 IRA catch up provision for those age 50+ will be indexed for inflation.
  • Catch-up contributions for participants in qualified plans earning more than $145,000 will be treated as Roth contributions (employees’ contributions will be taxed and future withdrawals tax free).
  • Beneficiaries of 529 plans can now roll up to $35,000 of unused 529 plan funds to a Roth IRA tax and penalty free over their lifetimes subject to the Roth annual contribution (and earned income) limits. Accounts must be at least 15 years old.
  • Surviving spouses will have the option of assuming their deceased spouses age for Required Minimum Distribution options, in addition to stretching the IRA distributions over their lifetimes. This allows older surviving spouses the opportunity to take less in withdrawals should they choose.

The following provisions are effective in 2025 and later:

  • Catch up contribution limits for employees age 50+ will increase to 50% of the traditional limit or $10,000 (whichever is greater) for employees age 60-63.
  • Participants under age 59 ½ will be afforded greater access to their retirement accounts without penalty, among the exemptions:
    • Beginning in 2026, participants can withdraw up to the lessor of 10% of their account balance or $2,500 annually (adjusted for inflation) without incurring the 10% early withdrawal penalty.


Items impacting business owners/employers:

The following provisions are effective in 2023:

  • Employer tax credits for startup plans (beginning after 2022) have been expanded to cover 100% of employer contributions up $1,000 for employees earning less than $100,000 and the credit phases down over 5 years from adoption (100%, 100%, 75%, 50%, 25%).
  • Employers are now able to open Roth SIMPLE and SEP IRAs alongside traditional SIMPLE and SEP IRAs

The following provisions are effective in 2024:

  • SIMPLE IRA plans contribution and catch-up limits are increased by 10% for employers with 25 or fewer employees. Larger employers can qualify as well with a higher (4%) dollar for dollar matching contribution to employees.
  • Starting in 2024, employer retirement plans will no longer require minimum distributions from Roth accounts, aligning with the rules for Roth IRAs.
  • Employers will have the option to add penalty free emergency savings accounts to non-highly compensated individuals of up to $2,500 (or 3% of salary).
  • Employers with 401(k), 403(b), 457(b) governmental and SIMPLE plans can now make matching payments on employees’ qualified student loan repayments.

The following provisions are effective in 2025 and later:

  • Starting in 2025 employers starting new plans must automatically enroll employees to employer retirement plans with salary deferrals between 3% and 10% with automatic 1% annual escalations unless the employee opts out. Small businesses (<10 employees) and new companies (<3 years old) as well as church and governmental plans are exempt.