The Secure Act 2.0 and Your Checklist

April 11, 2023 Author: Tess Downing, MBA, CFP®, Complete View Financial

Secure Act 2.0 Checklist

Without a doubt, you’re hearing about the SECURE Act 2.0. It seems like every day there’s a new headline in the news, which only serves to create a lot of questions. Let’s face it, headlines – and even the stories that follow – can leave you wondering how the new legislation applies to you.

The SECURE Act 2.0 is robust and is still being clarified by Congress, the IRS, and Financial Institutions. And that’s OK. We’ve put together a guide to help you identify the changes that may apply to your situation. This will allow you to make adjustments as necessary and keep your long-term financial plan on track.

To help give you insight into some of the most significant changes, we have a summary checklist below that groups the changes by the year they take effect.

Take a look at the checklist and consider the questions. If you answer YES to any of the questions, there’s a possible planning opportunity to discuss with your financial planner.

Planning Issues Effective 2023:

  • Were you born in 1951 or later? If so, consider the following:
    • If you were born between 1951 and 1959, your RMD begins when you turn 73. If you were born in 1960 or later, your RMD begins when you turn 75.
  • Does your employer offer a match on your retirement plan contributions?
    • If so, consider whether electing the newly allowed employer matches to Roth accounts (taxable as income) is better suited to your tax planning goals.
  • Are you contributing to a SEP or a SIMPLE IRA?
    • If so, consider whether making newly allowed Roth contributions makes sense for your personal tax situation.
  • Are you terminally ill, and do you need to access your retirement funds early?
    • If so, you may be eligible to access your funds penalty-free if your doctor expects you will pass away in the next 7 years.
  • Is giving to charity part of your financial planning goals?
    • If so, consider making qualified charitable contributions (QCDs) from your IRA (if over 70.5 yrs old) to a charitable remainder trust (CRT).

Planning Issues Effective 2024:

  • Do you (or will you) have extra funds in a 529 plan?
    • If so, consider transferring it to a beneficiary’s Roth IRA (if they have earned income). Be mindful of the $6,500 annual transfer limit and the $ 35,000 lifetime limit per beneficiary. The 529 plan must have been open for at least 15 years. (IRS will also rule on other specifics here.)
  • As an employee, do you plan to make catch-up contributions (>50 yrs old) to your employer’s retirement plan, and are your wages over $145,000?
    • If so, consider the impact of now only being eligible to make catch-up contributions to a Roth account (i.e. no tax deduction).
  • Do you have a Roth retirement plan (e.g., 401(k), 403(b), etc.)?
    • If so, consider how eliminating RMDs for this account affects your plan.
  • Does (or will) your employer offer the new Emergency Savings Account as part of your retirement plan benefits?
    • If so, consider whether contributions to this account would complement your emergency fund. There is a $2,500 balance limit and one distribution per month is allowed. Highly compensated employees can’t participate.
  • Do you currently have student loans?
    • If so, consider whether taking advantage of the newly allowed “employer match” on student loan payments makes sense for your situation.

Planning Issues Effective 2025:

  • Do you plan to make catch-up contributions to your employer’s retirement plan, and are you age 60, 61, 62 or 63?
    • If so, consider making increased catch-up contributions to your 401(k) in the amount of $10,000 or 150% of the applicable catch-up limit from the prior year (whichever is greater.)
  • Do you sponsor (or does your employer have) a new 401(k) plan established after 2024?
    • If so, all employees will be automatically enrolled in the 401(k), unless the business is an exempt place of employment (e.g., churches, government, 10 or fewer employees).

Planning Issues Effective 2026:

  • Do you plan to purchase (or already purchased) a qualified long-term care (LTC) insurance policy?
    • If so, consider whether to take a penalty-free distribution (less than 10% of the vested balance of $2,500) from your retirement plan to pay for your (or your spouse’s) qualified LTC premiums.
  • Are you currently disabled, and did your disability occur before the age of 46?
    • If so, consider whether the newly expanded access to ABLE accounts could benefit you.