Favorable Retirement Plan Changes Under Secure 2.0

Article Image: Favorable Retirement Plan Changes Under Secure 2.0

The SECURE Act 2.0 enacted on Dec. 29, 2022 has brought significant changes to the retirement plan provisions and is designed to encourage more participation and boost retirement savings. Many of the provisions of SECURE Act 2.0 that impact individual taxpayers go into effect starting in 2023. Here’s what you need to know:

Required Minimum Distribution

  • Beginning on January 1, 2023, the starting age for RMDs from traditional IRAs, 403(b) plans, and qualified plans increased from 72 to 73. In 2033, the starting age for RMDs will increase from 73 to 75.
  • Roth accounts under 401(k), 403(b), and 457 plans will no longer be subject to the RMD rules.
  • The tax penalty for failing to take the appropriate RMD has been reduced from 50% to 25%. If the failure to take an RMD is corrected within the specified time frame, the penalty decreases from 25% to 10%.
  • Beginning in 2024, the RMD requirement for Roth 401(k) will be eliminated.


  • Under the SECURE Act 2.0, sponsors of defined contribution plans can provide participants with the option of receiving matching contributions on a Roth basis, rather than on a pre-tax basis.
  • Beginning in 2023, SIMPLE IRAs can accept Roth contributions from employees. In addition, employers can offer employees the ability to treat employee and employer SEP contributions as Roth contributions.

Catch-up Limits

  • Currently, for participants aged 50 or older, the amount of the catch-up contribution is limited to $7,500 for most retirement plans, and $3,500 for SIMPLE plans, and are subject to inflation adjustments.
  • Under the SECURE Act 2.0, beginning in 2025, for participants aged 60, 61, 62, or 63, the catch-up limitation is the greater of $10,000 ($5,000 for SIMPLE plans) or 150% of the catch-up, and are also subject to inflation adjustments.
  • The annual limit on contributions to IRAs is also increased for participants aged 50 and older. The catch-up limit for IRAs is $1,000. Unlike the catch-up amount for other plans, this amount is not subject to increases for inflation under prior law. The SECURE Act 2.0 makes the IRA catch-up amount adjusted annually for inflation for tax years beginning after 2023.

Early Withdrawals

  • Beginning in 2024, under the SECURE 2.0 Act, individuals will be allowed to take an early “emergency” distribution from their retirement accounts for emergency expenses without the 10% excise tax penalty. SECURE Act 2.0 defines emergency expenses as “unforeseeable or immediate financial needs relating to personal or family emergency expenses.” Under this exception, only one emergency distribution per year of up to $1,000 is allowed, and individuals have the option to repay the distribution within three years.

Article Prepared By:
Audrey Li, Credentials | Supervising Senior

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