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SECURE 2.0 Act of 2022 Overview and eMoney Updates

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As part of the Consolidated Appropriations Act, 2023 signed into law on December 29, 2022, the SECURE 2.0 Act of 2022 provides updates designed to help strengthen the retirement system and Americans’ preparedness for retirement.

We know how important it is to make it as easy as possible for our users to deliver the most up-to-date financial plans to their clients. Keeping our calculations reflective of the latest laws and rules is at the top of our list of priorities.

ALL SECURE 2.0 Act Updates Are Live as of 4/4/2023

  • Required Minimum Distribution (RMD): The age to start taking RMDs increases to age 73 in 2023 and to 75 in 2033.
  • Roth RMD: Roth funds in a qualified employer plan are no longer subject to RMD.
  • Contributions Indexed: Catch-up contributions to an IRA are now indexed for inflation.
  • Catch-up Contributions at Ages 60-63: Special catch-up contributions for employees aged 60-63 starting in 2025 of $10,000 (indexed for inflation starting in 2026).
    • Note: 150% of the “standard catch-up contribution” for 2024 will follow.
  • Employer Contributions: Employee may elect that employer contributions be treated as Roth money for a Roth (401(k), Roth 403(b), and SEP type accounts.
  • Catch-up Contributions at Age 50: Catch-up contributions starting at age 50 must be treated as Roth contributions for high-income employees (those earning over $145,000 in the prior year adjusted for inflation).
  • IRA Inheritance: If a spouse inherits an IRA, they can elect to adopt the deceased spouse’s age for RMD purposes when it is beneficial to do so.
  • Simplified Employee Pension (SEP) IRAs: The ability to contribute to and grow Roth funds has been added to SEP IRAs.

On Friday, August 25, 2023:

The IRS issued guidance on forced Roth catch-up contributions for high-earning employees. Specifically:

  • The requirement of Roth catch-up contributions for employees earning above a certain previous year’s AGI threshold has been delayed until 2026.
  • All employees over the age of 50 may continue making catch-up contributions after 2023 regardless of income.

To learn more, see Section 603 of the SECURE 2.0 Act and this article from ASPPA. Changes have been made to reflect this updated guidance.

Note Regarding Catch-up Contributions Treatment as Roth

The “Catch-up Contributions at Age 50” change above may affect some of your clients with Traditional 401(k) and 403(b) plans in eMoney. Under the new Secure 2.0 Act, catch-up contributions for higher earners ($145,000 of income) must be Roth conversions. As a result of this update, those high earners with Traditional 401(k) and 403(b) plans will have their catch-up contributions halted.

As per the change, we recommend checking your client base and potentially switching their 401(k) or 403(b) to a Roth 401(k) or 403(b) selection to ensure that catch-up contributions for high earners are honored.

Note: the Roth versions of these plans support both Roth and pre-tax money.

Engaging with Your Clients Following the Updates

Watch our on-demand webinar, 2023 Tax Legislation Insights, SECURE 2.0 and eMoney Analysis,  for an in-depth look at these tax law updates and the resultant eMoney platform updates, as well as ways to use the eMoney application to facilitate engaging tax conversations with your clients.

Now these updates have been made, introduce your clients to these changes and the new possibilities for retirement savings to show them you have their best interests at heart and are helping them achieve their goals.

Plus, having another opportunity during the year to meet your clients and find out what’s on their minds may also uncover other opportunities.

Show your clients how the SECURE 2.0 Act may affect their savings and demonstrate the value of your advisory services.

Additional SECURE 2.0 Act Resources

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