Secure Act 2.0 | New Legislation Key Takeaways

Secure Act 2.0 | New Legislation Key Takeaways

April 25, 2023

In recent years, the U.S. retirement system has faced intense pressures. According to a Federal Reserve survey, in 2021, only 75% of non-retirees have any retirement savings whatsoever. To add to that, only 40% feel that their retirement savings are on track. While that number has improved—it’s up from 36% in 2020—there is still work to be done.1

In an attempt to relieve some of these pressures, encourage more retirement savings, and simplify the complexity that is our retirement system, Congress has enacted the SECURE Act 2.0. So, what is it? SECURE—Setting Every Community Up for Retirement Enhancement—2.0 was signed into law at the end of 2022, piggybacking on the initial SECURE Act of 2019.

There are many parts to this legislation, but we will focus on some key takeaways.

Increased Retirement Account Catch-Up Contributions – Currently, for employer-sponsored plans, the retirement plan catch-up contribution is $7,500. Starting in 2025, individuals ages 60-63 will be able to make catch-up contributions to a limit of $10,000 to a workplace plan OR 50% more than the regular catch-up contributions amount in 2024, whichever is greater. It’s important to note that there is an income component to this. If you earned more than $145,000 in the prior year, any catch-up contributions for those age 50+ will have to be directed to a Roth account. This means those dollars will be after-tax dollars. The current catch-up contribution for individual retirement accounts (IRA) is $1,000 (for those 50+). In 2024, that limit will be indexed to inflation, which means it will follow the federally determined cost of living increases year over year.

Changes to Required Minimum Distributions – A required minimum distribution (RMD) is the amount of funds that must be withdrawn from an individual’s retirement savings at a certain age threshold. The provisions in SECURE 2.0 increases the RMD age to 73 for distributions made after December 31, 2022. This applies to individuals who turn 72 on or after January 1, 2023. Individuals who turn 72 in 2023 are not required to take an RMD for 2023. The law also has an age increase in 2033. At that point, the RMD age will be 75. In previous years, no RMD exception existed for Roth accounts under employer-sponsored retirement plans. SECURE 2.0 has changed that so, effective 2024, owners of all Roth accounts (Roth employer plans and Roth IRAs) will not have to take lifetime RMDs. 

Expansion of Qualified Charitable Distributions (QCD) – A QCD is a direct transfer of funds from your IRA to a qualified charity. The important nuance being that the amount of the QCD is then excluded from your taxable income. Importantly, these distributions can satisfy a portion or the entirety of your RMD up to $100,000. The biggest change here is that the $100,000 will now be indexed for inflation beginning in 2024. The starting age at which QCDs can be made has remained unchanged at 70½. This provision also has an expansion of the type of charity or charities that can receive a QCD. Starting this year, and separate from the $100,000 mentioned above, people age 70½+ can make a one-time $50,000 distribution to a charitable remainder unitrust, a charitable remainder annuity trust, or a charitable gift annuity.   It is important to note that QCDs cannot be made to all charities, including donor-advised funds.

Retirement Savings Lost and Found Act – Most people will have many different jobs over the course of a career. As a result of job changes, there were nearly 25 million forgotten 401(k) accounts at the end of 2021.2 In an attempt to reduce this statistic, SECURE 2.0 includes the Retirement Savings Lost and Found Act. This act creates a centralized, online-searchable database for Americans’ retirement plans at the Department of Labor (DOL). This is an easy way for citizens to locate and build upon former employee retirement savings. While not up and running just yet, the DOL must have this online-searchable database in place by December 29, 2024.

529 Plans – 529 plans are college savings vehicles that enable you to invest after-tax funds that will grow tax-deferred. Funds can then be withdrawn tax free if used for certain qualified education-based expenses. After SECURE 2.0 was signed into law, there is a new allowance that, after 15 years, assets within a 529 plan can be rolled over to a Roth IRA for the beneficiary, not the account owner. There is an aggregate lifetime limit of $35,000. These rollovers are still subject to annual Roth IRA contribution limits.

The intention of SECURE 2.0 is to encourage and incentivize Americans to strengthen their retirement prognosis. The increased opportunities to save, as outlined above, are an attempt to improve on what many deem a retirement crisis in our country. Not all provisions are mentioned in this article and everyone’s financial situation is different, so we encourage a direct discussion with your Sand Hill Wealth Manager to see how you are impacted by any or all of the items included in SECURE 2.0.


1 – Federal Reserve. “Economic Well-Being of U.S. Households in 2021”. May 2022
2 – www.bankrate.com/retirement/how-to-find-lost-401k/Forbes, Fidelity, Lord Abbett

Articles and Commentary

Information provided in written articles are for informational purposes only and should not be considered investment advice. There is a risk of loss from investments in securities, including the risk of loss of principal. The information contained herein reflects Sand Hill Global Advisors' (“SHGA”) views as of the date of publication. Such views are subject to change at any time without notice due to changes in market or economic conditions and may not necessarily come to pass. SHGA does not provide tax or legal advice. To the extent that any material herein concerns tax or legal matters, such information is not intended to be solely relied upon nor used for the purpose of making tax and/or legal decisions without first seeking independent advice from a tax and/or legal professional. SHGA has obtained the information provided herein from various third party sources believed to be reliable but such information is not guaranteed. Certain links in this site connect to other websites maintained by third parties over whom SHGA has no control. SHGA makes no representations as to the accuracy or any other aspect of information contained in other Web Sites. Any forward looking statements or forecasts are based on assumptions and actual results are expected to vary from any such statements or forecasts. No reliance should be placed on any such statements or forecasts when making any investment decision. SHGA is not responsible for the consequences of any decisions or actions taken as a result of information provided in this presentation and does not warrant or guarantee the accuracy or completeness of this information. No part of this material may be (i) copied, photocopied, or duplicated in any form, by any means, or (ii) redistributed without the prior written consent of SHGA.


Video Presentations

All video presentations discuss certain investment products and/or securities and are being provided for informational purposes only, and should not be considered, and is not, investment, financial planning, tax or legal advice; nor is it a recommendation to buy or sell any securities. Investing in securities involves varying degrees of risk, and there can be no assurance that any specific investment will be profitable or suitable for a particular client’s financial situation or risk tolerance. Past performance is not a guarantee of future returns. Individual performance results will vary. The opinions expressed in the video reflect Sand Hill Global Advisor’s (“SHGA”) or Brenda Vingiello’s (as applicable) views as of the date of the video. Such views are subject to change at any point without notice. Any comments, opinions, or recommendations made by any host or other guest not affiliated with SHGA in this video do not necessarily reflect the views of SHGA, and non-SHGA persons appearing in this video do not fall under the supervisory purview of SHGA. You should not treat any opinion expressed by SHGA or Ms. Vingiello as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of general opinion. Nothing presented herein is or is intended to constitute investment advice, and no investment decision should be made based solely on any information provided on this video. There is a risk of loss from an investment in securities, including the risk of loss of principal. Neither SHGA nor Ms. Vingiello guarantees any specific outcome or profit. Any forward-looking statements or forecasts contained in the video are based on assumptions and actual results may vary from any such statements or forecasts. SHGA or one of its employees may have a position in the securities discussed and may purchase or sell such securities from time to time. Some of the information in this video has been obtained from third party sources. While SHGA believes such third-party information is reliable, SHGA does not guarantee its accuracy, timeliness or completeness. SHGA encourages you to consult with a professional financial advisor prior to making any investment decision.

Recent Posts

May 6, 2024
CNBC Last Call: Market Risks | April 29, 2024
Sand Hill News
Sand Hill News
CNBC Last Call: Market Risks | April 29, 2024

Sand Hill Global Advisors Brenda Vingiello joins CNBC Last Call to share her thoughts on the current markets. This content was produced and provided by

read more
Apr 29, 2024
Moving Past the Pandemic Environment
Brenda Vingiello
Brenda Vingiello,  CFA
Moving Past the Pandemic Environment

There is a common saying that time heals almost everything. Yet, even as we embark on the fifth year since the pandemic began, most of

read more
Apr 29, 2024
The Advantages of Exit Planning: Secure Your Legacy and Maximize Your Wealth
Sara Craven
Sara Craven,  CFP®, CEPA®
The Advantages of Exit Planning: Secure Your Legacy and Maximize Your Wealth

As a Certified Exit Planning Advisor™ (CEPA), I am committed to helping my clients navigate the complex world of business transitions and secure their financial

read more

Stay up to date, receive email updates from Sand Hill directly to your inbox!