The Secure Act

SECURE Act 2.0 Highlights (and Lowlights): 

• The Required Minimum Distribution (RMD) age is increasing. For those born after 1960, it will be age 75. For those born anytime in the 1950's, it is age 73. *This gives us an opportunity to burn off some future taxes prior to retirement. 

•  Qualified Charitable Distributions (QCD) will start indexing for inflation starting in 2024. The current maximum is $100,000 per year. The QCD eligibility age remains 70 1/2. *No comment. This is good news and still a great planning tool. 

• Unused 529 dollars can rollover to a Roth IRA for the beneficiary. The downsides: Only after the 529 has been in existence for 15 years; the maximum annual rollover amount is $6,500; and the lifetime rollover limit is $35,000. *This "somewhat diminishes the attractiveness" of doing this rollover. But it is an option for us out there. 

• Retirement plan "catch up" contributions will increase - beginning in 2025 and once the employee reaches ages 60 through 63 - the catch-up increases from $7,500 per year to the greater of $10,000 or 150% of the age 50 catch-up amount. *Yeah, me too. This one sounds overly complicated, for no reason. 

• Employers can now offer a matching contribution to the Roth side of the 401(k) or 403(b) plan. Caveat: This employer contribution will be taxable to the employee. *If your employer does not yet offer a Roth 401(k)/403(b) match, reach out to ask them about it. 

• Participants in Roth 401(k)s and 403(b)s will no longer be subject to RMDs. *It's about time Congress...Before this change, RMDs from these accounts made no sense. 

• Student loan matching payments: Qualified loan payments can be treated as retirement plan contributions by your employer when determining eligibility for employer matching funds. *This is interesting and worth looking at if you have any student loans hanging out there. 

• Inherited IRA accounts: Sadly, there were no updates to this rule to fully divest the account by beneficiaries by year 10, or to clarify the rules around this. *If you have an account owner that passed away in 2020-2023, check into whether or not you need to take any RMDs (depending on their age when they died.)