Tax Advantages of the New “SECURE 2.0” Law

By Dennis J. Rogers, CPA, CFP®

On November 29, 2022, the President signed the Consolidated Appropriations Act, which contained some significant retirement provisions dubbed “SECURE 2.0.” Many of the changes are technical adjustments, not applicable to most taxpayers. However, there were several which could benefit many of us. I will give the highlights of these here.
The original SECURE Act in 2019 increased the age for Required Minimum Distributions (RMD) from 70 ½ to 72. The new law increases the age to 73 starting on January 1, 2023, and to 75 by January 2033. We still can make Qualified Charitable Distributions (QCD) of up to $100,000 per taxpayer annually at 70 ½, however. This is a transfer directly from an IRA to a qualified charity which is not included in income. 1


The catch-up contributions limits for qualified plans for those ages 60 to 63 have been increased. This is an additional amount, currently allowed for those who have attained age 50. The 2023 limit for employer plans (except SIMPLE plans) is $7,500. The new limit for years beginning after December 31, 2024, is the greater of $10,000 or 50% more than the regular catch-up amount. 2
Participants in qualified plans will now be allowed to make penalty free withdrawals from their retirement accounts for:

  • Emergency expenses of up to $1,000 per year with repayments allowed for up to three years effective December 31, 2023, 3
  • Distributions to a terminally ill individual effective December 31, 2022, and 4
  • Up to $22,000 to individuals affected by a federally declared disaster retroactive to January 26, 2021. 5

Many people have been hesitant to fund Qualified Tuition Programs (529 Plans) because they are concerned the child may not use it. If the child does not attend a qualified program or receives large scholarships the gains on the investments can be taxable and subject to penalties when they are withdrawn. One solution to this has been the opportunity to change beneficiaries to another family member. Now SECURE 2.0 allows for a transfer to the beneficiary’s ROTH IRA. The beneficiary will be permitted to roll over up to $35,000 over the course of their lifetime, subject to the annual ROTH contribution limits, if the 529 plan has been open for at least fifteen years. 6

Many people have been hesitant to fund Qualified Tuition Programs (529 Plans) because they are concerned the child may not use it. If the child does not attend a qualified program or receives large scholarships the gains on the investments can be taxable and subject to penalties when they are withdrawn. One solution to this has been the opportunity to change beneficiaries to another family member. Now SECURE 2.0 allows for a transfer to the beneficiary’s ROTH IRA. The beneficiary will be permitted to roll over up to $35,000 over the course of their lifetime, subject to the annual ROTH contribution limits, if the 529 plan has been open for at least fifteen years. 6

  1. Section 107 of Title I of Consolidated Appropriations Act of 2023
  2. Section 109 of Title I of Consolidated Appropriations Act of 2023
  3. Section 115 of Title I of Consolidated Appropriations Act of 2023
  4. Section 326 of Title III of Consolidated Appropriations Act of 2023
  5. Section 331 of Title III of Consolidated Appropriations Act of 2023
  6. Section 126 of Title I of Consolidated Appropriations Act of 2023

The penalty for failure to take an RMD has been reduced from 50% to 25% and from 25% to 10% if it is corrected in a timely manner. 7
Retirement plans are now permitted to distribute up to $2,500 per year to pay a participant’s premiums for a certified long-term care insurance contract. These payments are exempt from the 10% early withdrawal penalty effective December 29, 2025. 8

Material discussed is meant to provide general information and it is not to be construed as specific investment, tax, or legal advice. Neither United Planners nor its financial professionals render legal or tax advice. Please consult with your accountant or tax advisor for specific guidance. This page contains links to third-party websites. By selecting a link, you will be leaving our website and launching a new browser window. Links are provided for informational purposes only and should not be viewed as an endorsement or affiliation with respect to any third party.
Dennis J. Rogers, CPA, CFP® is a Registered Principal offering securities and advisory services through United Planners Financial Services. Member FINRA/SIPC. FireSky Financial and United Planners Financial Services are separate companies. He is a partner in a financial advisory practice in Phoenix that focuses on helping clients make smart decisions about their money based on their personal core values. He can be reached at drogers@fireskyfinancial.com or 602-748-1900.

  • 7 Section 302 of Title III of Consolidated Appropriations Act of 2023
  • 8 Section 334 of Title III of Consolidated Appropriations Act of 2023