Articles & Alerts

Recently, the Setting Every Community Up for Retirement Enhancement (SECURE) Act 2.0 (the “Act”) was signed into law by President Biden. The legislation contains a host of changes that may enhance your retirement planning opportunities. Below are highlights of some notable provisions that you should be aware of as you consider your retirement plans.

• 529 College Savings Plan to Roth IRA Conversion. To prevent 529 plan balances that are not used for qualified education expenses from being subject to income tax and a 10% early distribution penalty, the Act allows an aggregate lifetime limit of up to $35,000 to be converted from a 529 plan to a Roth IRA. There are certain criteria that must be met prior to making the conversion:
  • The 529 plan must have been maintained for at least 15 years;
  • Rollovers cannot exceed the amount contributed in the previous 5-year period; and
  • The contribution amount to the Roth IRA cannot exceed the annual IRA contribution limit for the year.

This will be effective as of 2024.

• Increased Age for Mandatory RMDs. For years, the age for a required first-year minimum distribution (“RMD”) for an employee or IRA owner was 70½. This was raised to 72 a few years ago, but for 2023 the Act further increases the age that RMDs are effective to 73. However, you should be cognizant of the following:
  • Anyone currently subject to RMDs under the old 70½ or 72 age rules must continue to follow their existing RMD schedule;
  • The increased age for RMD to 73 applies for 2023 through 2032, after which the age increases again to 75.
  • Participants can still defer RMDs past these ages until retirement if permitted under their respective plan.
• Higher Catch-Up Contributions. As of 2025, the amount individuals between the ages of 60 and 63 can make as catch-up contributions to a workplace plan will increase from $7,500 to the greater of $10,000 or 50% more than the regular catch-up amount, which will also be indexed for inflation.
  • Note, if you earn more than $145,000, all catch-up contributions at age 50 or older will need to be made to a Roth account. This is effective in 2024.

In addition to the above, the SECURE Act 2.0 has a number of other benefits geared toward those approaching retirement as well as those who are only beginning to formulate their retirement plans. For more information on how the SECURE Act 2.0 may enhance your retirement, please contact your Anchin Relationship Partner.