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February 2023 E-Newsletter: Secure Act 2.0 is Finally Law.  Thumbnail

February 2023 E-Newsletter: Secure Act 2.0 is Finally Law.

Jonathan M. Gardey, MBA, CFA®, CFP®

President and Chief Executive Officer

Congress recently passed a new law with important changes that impact retirement accounts. The law is called the Secure Act 2.0 and it will impact most savers.  The following highlights many of the changes contained in the law.

Secure Act 2.0 is Finally Law. Here’s How it Changes the Game for Retirement Savers

Nestled within the more than 4,000 pages of the massive federal omnibus bill passed in late December are 350 pages of the widely anticipated Setting Every Community Up for Retirement Enhancement (SECURE) 2.0 Act of 2022. The broad-ranging SECURE Act of 2019 sequel introduces nearly 150 new provisions which start taking effect in 2023 that will enhance retirement programs for plan participants and sponsors alike.

These are a few of the provisions that will have the most direct impact on retirement savers:

  •  Increase in the Required Minimum Distribution age

The age at which retirees must begin required minimum distributions (RMDs) was already increased to 72 from age 70 ½ with the SECURE Act of 2019. SECURE Act 2.0 increases the age requirement further to age 73 beginning January 1, 2023, increasing it to age 75 by January 1, 2033.

  • IRA catch-up contribution limit indexed to inflation

The $1,000 annual limit on IRA catch-up contributions for individuals aged 50 and older has been static since its introduction. SECURE Act 2.0 now indexes the yearly limit to inflation starting in 2024.

  • Increases catch-up limit for ages 60 to 63

The annual catch-up contribution limit for 2022 is $6,500. Section 109 increases the limit to the greater of $10,000 or 50% more than the standard catch-up limit for individuals aged 60 to 63 starting in 2025. The increased limits will be indexed for inflation after 2025.

  • Student Loan payments eligible for matching employer contributions

Employers may now treat employees’ student loan payments as elective deferrals for purposes of providing matching contributions to 401(k) and 403(b) plans starting in 2024.

  • Paying for emergency expenses eligible for plan withdrawals

Starting in 2024, plan participants may withdraw up to $1,000 annually to pay for unforeseen emergency expenses. Participants have the option of repaying the distributions within three years, during which no further emergency distributions are allowed.

  • Allows 529 plan rollovers to Roth IRAs

This provision is a big break for families using 529 plans to fund college expenses. Starting in 2024, 529 plan beneficiaries may roll over up to $35,000 in unused funds over their lifetime to a Roth IRA. The 529 plan must have been open for more than 15 years to be eligible. Rollovers are subject to the regular annual contribution limits for Roth IRAs. Prior to this provision, the distribution of funds from a 529 plan that were not needed for college expenses was taxed and penalized.

  • Establishes national search database for “lost” retirement plans

For all the job-hopping retirement savers who may have left behind a retirement plan, this section creates a searchable online database to find them. The database will help locate the contact information for past employers’ plan administrators starting no later than 2025.

  • Penalty-free withdrawals from retirement plans for domestic abuse victims

Starting in 2024, self-certified victims of domestic abuse may withdraw the lesser of $10,000 or 50% of their account’s value without incurring a 10% penalty. Though the distributions are taxable, participants will be refunded taxes paid if they repay the distribution within three years.

  • Starter 401(k) plans

The “Starter 401(k)” provision addresses the more than 65 million Americans not covered by a workplace retirement plan. Until now, small businesses have been unable to provide a retirement plan provision due to the heavy costs and liabilities involved in establishing and administering them. Beginning in 2023, the Starter 401(k) provision reduces or eliminates those obstacles making it easier and less expensive for small businesses to offer a workplace retirement plan. Starter 401(k) plans will also be eligible for tax credits (established under the first SECURE Act) for offering employees a retirement plan.

  • Automatic enrollment in retirement plans expansion

Eligible employees will be automatically enrolled in newly established 401(k) and 403(b) plans. However, employees may opt-out of participation. The coverage for initial automatic enrollment starts at 3% but can be as high as 10%, with automatic increases in 1% increments after that until it reaches 15%. Current 401(k) and 403(b) plans are exempt from the new requirement.


SECURE Act 2.0 is a significant bill that not only furthers the retirement planning enhancements offered by the first SECURE Act of 2019 but also introduces some game-changing provisions that substantially increase the opportunities for millions of Americans to save for retirement.

At Gardey Financial Advisors, we make it a priority to keep our clients and followers informed, especially when major legislation passes that can impact retirement planning. Of course, we are already taking these changes into account for our clients’ financial and retirement plans. If you are someone in need of guidance, we are here to help.

For more information about the comprehensive planning services we provide, we encourage you to visit our site, learn more about our services, and see if we could be a good match. We best serve clients looking for exceptional client service, who value a long-term partnership, and have a minimum of $500,000 in investable assets. 

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