Secure act 2.0: What this new law could mean for your retirement

The age at which required minimum distributions must begin is now 73, up from 72, for people born in 1951 through 1958. As currently drafted, people born in 1960 and later will begin their mandatory withdrawals at age 75. Additional clarification is needed for people born in 1959.

Required minimum distributions from Roth accounts in employer sponsored retirement plans are no longer required for taxable years beginning after January 1, 2024. Effective date: Taxable Years Beginning After 12/31/23.

Age-based catch-up contributions will now have to be made as designated Roth contributions if you earn more than $145,000 at your employer. This means taxes will be taken out of the catch-up amount before it is contributed to the plan. That contribution grows tax deferred, and any eligible withdrawal—once the account has been open for five years and you’ve met certain plan distribution requirements—will be tax-free, including earnings. If your salary is $145,000 or less, you may have the option, but not the requirement, of designating catch-up contributions as Roth. Effective date: Taxable years beginning after December 31, 2023 with extension of administrative transition period to January 1, 2026

If you’re age 60 to 63 and still working, you can now contribute up to $10,000 as a catch-up contribution if your plan allows. If your plan permits the increased catch-up, and you earn $145,000 or more, the catch-up amount must go into a Roth account with your plan, which means taxes will be taken out before it is contributed to the plan. The designated Roth contribution grows tax-deferred, and any eligible withdrawal—once the account has been open for five years and you’ve met certain plan distribution requirements—will be tax-free, including earnings. If your salary is less than $145,000, you may have the option, but not the requirement, of designating catch-up contributions as Roth. Effective date: After 12/31/24

People with 529 college savings plans have a new benefit: The beneficiary (the intended recipient of the money) of a 529 plan can roll as much as $35,000 into a Roth IRA over the course of multiple years, if the plan has been open for at least 15 years. Effective date: After 12/31/23

The Saver’s Credit currently permits people with income below a certain threshold to claim a tax credit of up to $1,000 when they contribute to a retirement plan. Secure 2.0 offers a “Saver’s Match,” which raises the income limits and allows your credit to be deposited into your employer’s retirement plan (if your employer allows) or your IRA. Effective date: After 12/31/26

If your plan allows, the new bill enables you to elect that your employer contributions (such as a match or additional contributions) be made to a Roth account in your plan. This means that taxes will be taken out of the amount your employer contributes before contributed to the plan. That contribution grows tax deferred, and any eligible withdrawal—once the account has been open for five years and you’ve met certain plan distribution requirements—will be tax-free, including earnings. Effective date: Immediately

Your employer may now choose to make a “matching contribution” to your workplace retirement plan based on your qualified student loan repayments, even if you are not currently contributing to the plan yourself.  Effective date: After 12/31/23