The Secure Act 2.0 & Beyond

The Secure 2.0 Act, passed in December, contains more than 90 provisions affecting retirement savings plans, such as individual retirement accounts and 401(k) workplace plans. 

The Secure 2.0 Act, passed in December, contains more than 90 provisions affecting retirement savings plans, such as individual retirement accounts and 401(k) workplace plans.

Only some changes are effective this year. Others will take effect in years 2024 through 2027. In 2025, for example, limits on catch-up contributions to 401(k)s and Simple IRAs will be increased. In 2026, ABLE plans, a tax-advantaged plan for disabled people, will raise the age of disability onset to 46 from 26. In 2027, a new program for low-income individuals called Saver’s Match, will offer a match by the Federal government of 50% of contributions to an IRA or 401(k) up to $2,000 a year.

Still, other changes won’t apply for as long as a decade.

There are so many parts to the law, and the effective dates are all over the board, So it’s important to know what you can do right now. During your meetings throughout the year ask your BWFA Certified Financial Planner how these changes might be able to help you and your family.


Here are some of the key changes for 2023:

The age for taking the mandated annual withdrawals known as required minimum distributions, or RMDs, is raised to 73 from 72 (or 70½ before the original Secure Act in 2020). Those who were subject to RMDs under the previous rules must continue to follow their existing schedules. In 2033, the age for taking RMDs will rise to 75 from 73.

The penalty for missed RMDs is reduced from 50% to 25% and even 10% if corrected in a “timely” manner. The window for correction is two years from the end of the year in which the RMD should have been taken. In addition, you can request a waiver of any penalty at all from the Internal Revenue Service by taking the RMD now and filing Form 5329 with a reasonable-cause explanation.

A statute of limitations is now created, limiting the period in which the IRS can impose a penalty: three years for missed RMDs and six years from the tax-filing deadline of the year in which an excess contribution was made. Previously there was no statute of limitations.

Roth (after-tax) contributions can be made to SEP and Simple IRAs, which are retirement plans for small businesses. Only employers make contributions with SEPs, while with Simples, both employees and employers make contributions. Until now, contributions to SEP and Simple IRAs had to be pretax.

Employer-matching contributions to a Roth account can, at an employee’s option, be made as a Roth. Previously they had to be made on a pretax basis. The employee, however, pays the income tax on this amount.

Additional exceptions now exist to the 10% early distribution penalty for withdrawals from a retirement plan before age 59½. These include terminal illness, net income attributable to excess contributions, and distributions in the event of a qualified disaster, up to $22,000.

A one-time-only $50,000 qualified charitable distribution to a charitable gift annuity, a charitable remainder unitrust or a charitable remainder annuity trust is allowed.

Previously no benefits were permitted when making a qualified charitable distribution.


Many more changes are in store for next year. They include:

The $1,000 catch-up contribution to IRAs and 401(k)s for those age 50 and older will be indexed for inflation.

Qualified charitable distributions will also be indexed for inflation.

Beneficiaries of “529” education-savings accounts can roll over up to $35,000 of leftover funds to a Roth IRA in the name of the 529 beneficiary. These rollovers are subject to Roth IRA annual contribution limits, and the 529 must have been in place for at least 15 years.

Roth 401(k) contributions will no longer be subject to RMDs during the owner’s lifetime, since the money has already been taxed when contributed. This will bring Roth workplace plans in line with laws governing Roth IRAs, whereby plan dollars are excluded from RMD calculations.

Employer matching contributions may be made on student-loan payments, just like they are made on 401(k)s. Each payment you make on a student loan can therefore be matched according to the terms of the plan.

Further exceptions to the 10% early distribution penalty include expenses stemming from a financial emergency, up to $1,000 a year, and payments for victims of domestic abuse, up to $10,000 indexed for inflation.

As you can see, there are many new changes affecting retirement plans. We at BWFA are here to help you navigate through these revisions and strategize which benefits to take advantage of.


President & CEO