chevron-down Created with Sketch Beta.

Probate & Property

May/Jun 2023

Secure Act 2.0 Top Ten

Mark R Parthemer


  • There are significant and taxpayer-friendly changes to retirement plans through what is referred to as the SECURE Act 2.0.
  • We recommend employers and employees work closely with their tax advisors to best position themselves to navigate this new law.
Secure Act 2.0 Top Ten
ilona titova via Getty Images

Jump to:

On December 29, 2022, President Biden signed into law the omnibus spending bill. A key aspect of the Consolidated Appropriations Act, 2023, is funding the federal government. But with a total of $1.7 trillion of spending, much more is included in this law, which spans 4,126 pages. (For context, this is more than three times longer than War and Peace, first published at 1,225 pages.) We explore only one component, the SECURE Act 2.0.


There are significant and taxpayer-friendly changes to retirement plans through what is referred to as the SECURE Act 2.0. It is a combination of three bills from early in 2022, none of which became law: the Securing a Strong Retirement Act of 2022, introduced in the House, and The Enhancing American Retirement Now Act (EARN) and the Retirement Improvement and Savings Enhancement to Supplement Healthy Investments for the Nest Egg Act (RISE & SHINE), both introduced in the Senate.

The new SECURE Act 2.0 builds upon the 2019 Setting Every Community Up for Retirement Enhancement Act, known as the SECURE Act. The original SECURE Act was part of the Further Consolidated Appropriations Act, 2020.

Top Ten Highlights

There are many changes and new provisions in the SECURE Act 2.0. Here are 10 highlights, some of which will take effect in 2023, others in later years, as detailed below.

  1. Required minimum distributions (RMDs):
    1. The age to start taking RMDs increases to 73 in 2023 and 75 in 2033.
    2. The penalty for failing to take an RMD will decrease from 50 percent to 25 percent of the RMD amount and, for IRAs only, down to 10 percent if corrected in a timely manner.
    3. RMDs will no longer be required from Roth accounts in employer retirement plans.
  1. Qualified charitable distributions (QCDs) of up to $50,000 can be made to charitable remainder annuity trusts, charitable remainder unitrusts, and charitable gift annuities.
  2. Student loan payment matching allows employers to “match” employee student loan payments with contributions into a retirement account.
  3. Automatic 401(k) and 403(b) enrollment for employees will be the default unless they opt out.
  4. Catch-up contributions for those 50 and over will be indexed for inflation and there will be enhanced catch-up provisions for individuals ages 60–63.
  5. Defined contribution retirement plans will be able to add an emergency savings account associated with a Roth account as well as a Saver’s Match for lower-income earners.
  6. A limited withdrawal penalty exception is created for emergencies.
  7. Roth matching will be permitted at the option of the employer.
  8. 529 plan rules are changed to permit transfer of up to $35,000 into a Roth IRA when the plan is over 15 years old.
  9. A new Retirement Savings Lost and Found searchable database will be established for 401(k) and pension plans.


Congress has recognized the value of retirement savings, as well as the fact that many of the original rules for individual retirement accounts (IRAs) deserve updating. After all, the first law establishing IRAs was in 1974. Following is an exploration of each of these 10 changes in greater detail.

1. Required Minimum Distributions

The SECURE Act 2.0 delays the triggering age for RMDs, that is, the year in which one is required to begin taking minimum distributions from a tax-advantaged retirement savings account. Currently, the mandatory age to begin making withdrawals is 72 (under the SECURE Act, it changed from 70½ to 72). Starting January 1, 2023, the mandatory age will change to 73; in 2033, it will be 75.

Two important things to think about:

  • If you turned 72 in 2022 or earlier, continue taking RMDs as scheduled.
  • If you’re turning 72 in 2023 and have already scheduled your withdrawal, you may want to reconsider your plan.

Starting in 2023, the steep penalty for failing to take an RMD will decrease from 50 percent to 25 percent of the RMD amount not taken. The penalty will be further reduced to 10 percent for IRA owners if the account owner withdraws the RMD amount previously not taken and submits a corrected tax return in a timely manner.

  • Roth accounts in employer retirement plans will be exempt from the RMD requirements starting in 2024.
  • Beginning immediately, in-plan annuity payments that exceed a participant’s RMD amount can be applied to the following year’s RMD.

Planning consideration: Consider when to take your first RMD, as the law permits you to defer the first payment until April 1 of the second year. For example, if you turn 73 in 2024, you can either take your first RMD by December 31, 2024, or delay until no later than April 1, 2025. But if you delay your first RMD to April 1, 2025, you will pay tax on two RMD distributions in 2025—your first by April 1, 2025, to satisfy the 2024 required withdrawal and the second by December 31, 2025, to satisfy the 2025 required withdrawal. This stacking of income in 2025 could have an adverse effect on your tax bracket and other tax attributes.

2. Qualified Charitable Distributions

Under existing law, an IRA owner age 70½ or older does not have to pay tax on up to $100,000 of QCDs per year. These can be made with voluntary withdrawals as well as with RMDs. To qualify, the QCD must be paid directly to a qualified charity (accomplished by having the distribution check made payable to it). Donor advised funds, supporting organizations, and private foundations are not qualified charities.

Beginning in 2023, people age 70½ and older may elect as part of their QCD limit a one-time gift up to $50,000, adjusted annually for inflation, to a charitable remainder unitrust, a charitable remainder annuity trust, or a charitable gift annuity. (Note that these funds cannot be contributed to any such vehicle funded with non-QCD dollars.) This amount counts toward the annual RMD, if applicable. Similarly, these QCDs must be paid directly to the recipient vehicle.

3. Student Loan 401(k) Matching

Starting in 2024, employers will be able to “match” employee qualified student loan payments with matching payments to a retirement account. Qualifying payments are those made to a qualified education loan that was incurred by the employee to pay qualified higher education expenses, as defined in the Higher Education Act of 1975. Employers are permitted to rely on a certification by employees that the debt qualifies.

If an employer wishes to permit such matches, the plan must provide for them. Also, matches must be nondiscriminatory and must vest in the same manner as elective deferrals.

Matches cannot exceed the employee’s annual contribution limits.

4. Automatic Enrollment and Portability

Starting in 2025, employers establishing a new 401(k) or 403(b) retirement savings plan must have default automatic enrollment for all employees (subject to their eligibility). The initial contribution must be at least 3 percent but not more than 10 percent of pretax earnings. Plans also are to provide for an automatic annual increase after the first year of participation of 1 percent per year until the contribution is at least 10 percent of the employee’s compensation, but not exceeding 15 percent.

Employees may opt out of making contributions or elect to have contributions made at a different percentage.

Small businesses with 10 or fewer employees and businesses that started less than three years ago would be exempt.

The Act permits retirement plan service providers to offer plan sponsors automatic portability services, transferring an employee’s retirement accounts to a new plan when they change jobs. The change could be especially useful for savers who otherwise might cash out their retirement plans when they leave jobs.

5. Catch-up Contributions

Expanded IRAs: Qualifying individuals can contribute $6,500 in 2023 to a traditional or Roth IRA. This contribution limit is indexed for inflation. Persons 50 or older are entitled to make a $1,000 catch-up contribution. Previously, this $1,000 catch-up was not indexed for inflation, but it will be starting in 2024. The adjustment will be rounded down to the nearest $100.

401(k) and other employer-sponsored plans: The 2023 contribution limit is $22,500, with a catch-up of an additional $7,500 for those 50 and older. Starting in 2025, individuals ages 60 through 63 years old will be able to make catch-up contributions up to the greater of $10,000 or 150 percent of the “standard” catch-up contribution. The $10,000 will be indexed for inflation starting in 2026.

One twist: Beginning in 2024, there will be an income limit that governs the type of account into which a catch-up contribution can be made. Those earning more than $145,000 in the prior calendar year will be able to make a catch-up contribution only to a Roth account in after-tax dollars. Individuals earning $145,000 or less will be exempt from the Roth requirement. Starting in 2025, the $145,000 income limit will be indexed for inflation but rounded down to the nearest $500.

6. Savings

Beginning in 2024, defined contribution retirement plans are able to add an emergency savings account that is a designated Roth account eligible to accept participant contributions for non–highly compensated employees. These are referred to as pension-linked emergency savings accounts.

Contributions are limited to $2,500 annually (or lower, as set by the employer) and the first four withdrawals in a year would be tax- and penalty-free. Depending on plan rules (set by the employer), contributions may be eligible for an employer match. In addition to giving participants penalty-free access to funds, an emergency savings fund could encourage plan participants to save for short-term and unexpected expenses. Upon termination of employment, the participant can roll the funds into another Roth. If a participant becomes a highly compensated employee, the account can be retained but no further contributions made into it. The $2,500 threshold is indexed for inflation beginning in 2025.

The current Saver’s Tax Credit will be transformed in 2027 to a Saver’s Match. These changes apply to lower-income-earning participants. Under the Tax Credit program, a credit on the participant’s tax return of up to $1,000 ($2,000 if married) is given as a match to plan contributions by 10 percent, 20 percent, or 50 percent of the first $2,000 in contributions, with the percentage dependent on income and filing status. It is phased out based on adjusted gross income (AGI). In 2023, for example, it is eligible only for a married couple whose AGI is less than $73,000. Under the Saver’s Match, instead of a credit on the return, the federal government will make a contribution of the qualifying payments into the participant’s retirement plan (other than a Roth). An exception is if the match is less than $100, in which case it will be issued as a tax credit.

7. Withdrawals

Typically, one pays a 10 percent penalty tax on a withdrawal from a tax-preferred retirement account before age 59½, unless meeting an exemption. The new act adds an exemption effective in 2024 “for purposes of meeting unforeseeable or immediate financial needs relating to necessary personal or family emergency expenses,” allowing withdrawals up to $1,000 penalty-free.

Only one distribution can be made every three years, or one per year if the distribution is repaid within three years. If the funds are not repaid within three years, however, penalties will be applied on withdrawals for another emergency for the same reasons.

Penalty-free withdrawals are also allowed for individuals who need the funds in cases of domestic abuse. These are limited to the lesser of $10,000 or 50 percent of the present value of the vested benefit. Also, penalty-free withdrawals may be made in the case of a participant’s terminal illness. Generally, under the tax code, someone is terminally ill if he has a life expectancy of 24 months or less; however, for this withdrawal exception, the expectancy is expanded to 84 months or less.

8. Roth Matching Permitted

Unlike Roth IRAs, RMDs from an employer-sponsored plan are required until tax year 2024. Further, any employer match of contributions to an employer-sponsored Roth 401(k) goes to a regular 401(k) and thus is subject to RMD rules.

Under SECURE Act 2.0, beginning in 2025, employers will be able to provide employees the option of receiving vested matching contributions in Roth accounts. Previously, matching contributions in employer-sponsored plans were made on a pretax basis. Contributions to a Roth retirement plan under this match will be after-tax, but earnings still can grow tax-free.

9. 529 Plan Changes

Starting in 2024, funds in a 529 account that was opened at least 15 years before the date of distribution can be rolled into a Roth IRA account without current income taxation or penalty. These rollovers may be done multiple times but are subject to an aggregate lifetime limit of $35,000. Further, each distribution cannot exceed the aggregate amount contributed (and earnings attributable thereto) before the five-year period ending on the date of the distribution. Also, the rollover is treated as a contribution towards, and thus capped by, the annual Roth IRA contribution limit.

10. Retirement Savings Lost and Found Database

Within two years of the date of enactment of the SECURE Act 2.0, the Department of Labor is to establish a national database that is searchable to serve as a “lost and found” for 401(k) and pension plans. This will permit employers to locate “missing” participants as well as enable participants to more easily pinpoint where their retirement savings are located. Although the Department of Labor is instructed to work with the IRS on securing a participant’s personal information, participants are permitted to opt out of the database.


As shown in these sample provisions, the SECURE Act 2.0 makes sweeping and taxpayer-friendly changes to retirement accounts. We recommend employers and employees work closely with their tax advisors to best position themselves to navigate this new law.

The author takes sole responsibility for the views expressed herein and these views do not necessarily reflect the views of the author’s employer or any other organization, group, or individual.