Client conversations about the SECURE 2.0 Act

On Thursday, December 29, 2022, President Biden signed into law the “Consolidated Appropriations Act, 2023.”1 Included in this act is SECURE 2.0 which will have implications for financial advisors and their clients.

What are the main points you and your clients need to know? Here, we’ll briefly summarize a few features you may wish to include in your upcoming conversations.

Key changes effective in 2023

Not all changes are effective immediately, a welcome difference from the SECURE 1.0 Act passed at the end of 2019 which was effective immediately upon January 1 of the following year. That said, there still are important provisions to keep in mind that went into effect January 1, 2023, or immediately upon SECURE 2.0’s signing.

Required minimum distribution age increases

The initial RMD age will increase incrementally to age 75 over 10 years. The first increase is to age 73 in 2023. Therefore, those who turn 72 in 2023 get another year to defer starting their RMDs.2

New employer matching options

Employers now have the option to contribute matching and non-elective funds to an employee’s defined contribution plan on a Roth basis.2

Penalty exceptions for the terminally ill

Those who are terminally ill will not be required to pay the additional 10% penalty for distributions.2

Reduced penalties for missed RMDs

Failure to take required RMDs previously resulted in a 50% penalty, now reduced to 25%. If corrected in a timely manner, penalties may be reduced further to 10%.2

Expanded IRA charitable distributions

SECURE 2.0 allows for a one-time $50,000 distribution to charities through charitable gift annuities, charitable remainder unitrusts and charitable remainder annuity trusts, and also indexes the annual IRA charitable distribution limit of $100,000.2

Changes in effect after 2023

Thankfully, there is a little more breathing room with version 2.0 as it affects implementing other changes, including the following:

Indexing IRA catch-up limits

Previously, catch-up contributions for those age 50 and over weren’t indexed. Beginning in 2024, they will be.2

New age tier for catch-up limits

Beginning in 2025, catch-up contributions for those ages 60–63 increases to $10,000 or 50% more than the regular catch-up amount, whichever is greater.2

After-tax catch-up contribution requirements

Employees earning more than $145,000 are required to make all catch-up contributions to their qualified retirement plans using after-tax dollars, similarly to a Roth-type account, beginning January 1, 2024.2

RMD elimination

Beginning in 2024, Roth accounts in employer retirement plans will no longer be subject to RMD requirements.2

Student loan debt

Starting in 2024, employers will be able to "match" employee student loan payments with matching payments to a retirement account.2

College savings

After 15 years, 529 plan assets can be rolled over to a Roth IRA for the beneficiary, subject to annual Roth contribution limits and an aggregate lifetime limit of $35,000.2

There are many other provisions, of course, but these are a good place to start when talking with clients. Please contact your wholesaler if you would like to talk through other implications as this legislation gets implemented. Also, take a look at our helpful resources below that may offer additional topics to serve as conversation starters.


Marshall Heitzman
Written by: Marshall Heitzman, CFP®, ChFC, FLMI, CPCU, BFA™

Marshall is TruStage's Advanced Planning Expert and has more than 25 years of experience in the insurance and financial services industry. He consults Financial Professionals on advanced retirement planning concepts for retirement and wealth management clients.

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