The Consolidated Appropriations Act of 2023, passed by Congress and signed into law by the President, contained several retirement related provisions collectively known as the “SECURE Act 2.0.” The SECURE Act 2.0 is a follow up to the original Setting Every Community Up for Retirement Enhancement (SECURE) Act passed and signed into law in December 2019.
Here are some of the key provisions of this new law:
Raising the Required Minimum Distribution (RMD) Starting Age
The original SECURE Act moved the starting age to 72 in 2020 and the SECURE Act 2.0 has no impact on the RMD starting age of retirees who have already begun taking RMDs.
Using IRA Distributions for Giving
Higher Catch-Up Contribution Limits
Additional Catch-Up Contribution Rules
529 to Roth IRA Transfers
- The 529 plan must have been open for at least 15 years
- The annual limit that can be moved to a Roth IRA from a 529 plan is the annual limit on Roth contributions ($6,500 this year).
- The lifetime maximum amount that can be moved to a Roth IRA from a 529 plan is $35,000
- Contributions (and earnings on those contributions) to the 529 plan in the last 5 years are not allowed to be moved to a Roth IRA
Importantly, these penalty-free transfers from 529 plans to Roth IRAs are not subject to the Roth IRA income limits (currently single filers who make $153,000 or more and joint filers who make $228,000 or more this year are not eligible to make Roth IRA contributions).
Student Loan Matching
The common theme surrounding most of the provisions in the SECURE ACT 2.0 is providing additional opportunities to build your retirement nest egg. As always, reach out to your Wealth Manager to better understand how the changes in the SECURE Act 2.0 will apply to your unique financial situation.
About the Author: A member of the WrapManager Investment Policy Committee, Doug Hutchinson, CFA® is responsible for developing and refining our money manager due diligence and review standards. He is also responsible for monitoring and evaluating current and prospective money managers.
Doug graduated from the University of California, Santa Barbara with a BA in Business Economics. He is a CFA® Charterholder and an active member of the CFA® Society of San Francisco.