In Review: Secure 2.0 Act

The SECURE 2.0 Act was signed into law by the President on December 29, 2022, and includes 92 new provisions aimed at promoting savings, boosting incentives for businesses, and offering more flexibility to those saving for retirement. Vector’s Sharon Calhoun joins Jason to discuss a few changes made by the law in this week’s Market Perspective video. 

First, the age at which owners of retirement accounts must start taking RMDs (Required Minimum Distributions) will increase from 72 to 73, starting January 1st of this year. Additionally, the Act pushes the age at which RMDs must start to 75 starting in 2033. 

Second, employers will now be able to provide employees the option of receiving matching contributions to Roth accounts. Previously, matching in employer-sponsored plans were only made on a pre-tax basis. As you may know, contributions to a Roth retirement plan are made after tax, which means those dollars of the initial contribution will land on your tax return. 

Third, all catch-up contributions to qualified retirement plans will be subject to Roth tax treatment starting in 2024. An exception to this provision is provided for employees with compensation of $145k or less, which will be indexed for adjustments. 

There is much more in the SECURE 2.0 Act which we will be expanding on over time. It is important to consider these opportunities as only a part of your broader financial picture. If you have any questions, please contact your team at Vector. 

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