Will these changes affect your retirement benefits?

Congress passed the “Secure Act 2.0” on December 20, 2022, which makes major changes in the rules as to distributions from 401k plans and IRAs. If you have any questions, please contact us to see how these new rules may impact your estate planning. Below is a summary of  some of the changes.


NEW REQUIRED MINIMUM DISTRIBUTION DATES.  Beginning in 2023 through 2032, for those born in  the  years 1951 through 1959, the age  you must begin taking distributions from your IRA (“RMD”) and retirement plans  is 73. Therefore, if you  attain age 73 in 2024, your RMD date begins in 2024. Beginning in 2033, the RMD date is age 75 for those born 1960 or later. (Even if you hit the appropriate age for a distribution, if you are still working and own less than 5% ownership of your employer, your RMD from a qualified plan does not begin until you terminate from employment.)

SURVIVING SPOUSE.  Effective 2024. Under existing law, a surviving spouse may elect to rollover a predeceased spouse’s IRA/401k or other qualified plan into his or her own IRA or leave it in the deceased spouses IRA/401k or other qualified plan and delay distributions until the deceased spouse would have reached the required RMD date, but then use the “single life table” to calculate the payout. Now if elected by the surviving spouse, he or she is treated as the deceased spouse and will use the “uniform table” to calculate the payout, which is much slower than the single life table that provides for more tax deferred growth. Also, the future beneficiaries might still qualify for the stretch IRA rules if they are eligible designated beneficiaries.

LONG TERM CARE INSURANCE. Beginning in 2026, you can distribute the lesser of 10% of your vested retirement benefit or $2,500 to pay your or spouse’s long term care premiums without being subject to a 10% penalty for an early distribution.

ANNUITIES.  The new law makes it easier to hold annuities in a retirement plan or IRA. The new law now allows annuities in retirement/IRA accounts to have guaranteed  annual increases, return of premium death benefits and period certain guarantees. Additionally, the new law expands the little used qualifying longevity annuity contracts. Under the existing  law, subject to certain dollar limits, you could invest a small portion of your retirement/ira in an annuity that would begin payments long past the required minimum distribution date and the amount invested would not be used in calculating the RMD. Also, plans are allowed to purchase variable annuities holding ETFs. The new law eliminates the 25%-dollar limit and increases the premium from $145,000 to  $200,000 and provides for an inflation adjustment. Additionally, the existing rules allow distributions prior to age 59 ½  without a 10% penalty by taking distributions over a substantially equal period of the longer of five years or age 59 ½.  Those rules have been expanded to provide for a safe harbor for annuity payments.

PENALTIES FOR FAILURE TO TAKE RMD.  Effective for 2023, the penalty for failing to take the RMDs is reduced from 50% to 25% and can be reduced to 10% if you report the error before the IRS issues a notice of deficiency, assessed the tax or the last day of the second year after the tax is imposed. For example, if you failed to take a 2023 RMD, the tax is due as of January 1, 2024, and you have until the end of 2025 to correct the deficiency. Additionally, the statute of limitations has been changed so that it begins running in the year your 1040 was filed rather than the particular form used to report failures to pay RMD e.g., 3 years from filing.

EMERGENCY WITHDRAWAL.  Beginning in 2024, individuals can withdraw up to $1,000 from an IRA or 401k plan for unforeseeable or family emergencies without a 10% penalty and have up to three years to put the money back.

CHARITABLE GIFTS. The new RMD rules do not change the date for qualified charitable deduction contributions of charitable IRA distributions, which is still age 70 ½. However, the $100,000 annual limit will be adjusted for inflation. Also, there will be allowed a $50,000 distribution to charitable remainder trusts or gift annuities of up to $50,000.


NEW ROTH DISTRIBUTION RULES. Beginning January 1, 2024, Roth contributions to a 401k, 403(b), 457(b) will have RMD rules identical to Roth IRA e.g. No distributions are required while the employee is alive.

CONTRIBUTIONS TO SIMPLE AND SEP.  Beginning January 1, 2023 Roth contributions allowed to SIMPLE and SEP IRAs.

EMPLOYER CONTRIBUTIONS. Beginning December 29, 2022, employers can make matching or non-elective contributions as a Roth contribution to 401k, 403b or 457(b) plans.

SECTION 529 QUALIFIED TUITION PLAN CONVERSION TO ROTH IRA. Effective 2024 if certain requirements are satisfied unused 529 plans can  be rolled over to a Roth. The requirements are: (i) the 529 plan must exist for 15 years; (ii) the last five years contributions and earnings are not eligible for rollover, (iii) only the beneficiary of Section 529 plan can rollover to a Roth; (iv) the maximum amount is $35,000 over beneficiary’s lifetime; and (v) the annual rollover amount subject to the Roth IRA is subject to annual contribution limits less other IRA contributions for the year.


IRA. Annual catch-up provision allowing additional contributions to traditional or Roth IRAs for individuals who have reached age 50, which is currently $1000, will be indexed for inflation beginning in 2024.

CATCH UP CONTRIBUTIONS. – Beginning in 2025 for individuals who have attained ages 60-63, the catch up contribution will be increased to the greater of $10,000 or 150% of the  regular catch up amount. For SIMPLE plans, the increase is from $3,000 to $5,000 or 150% of the regular catch up if greater.  The regular catch up amount is indexed for inflation beginning in 2025. For example, the 2022 regular catch up contribution amount for a 401k is $6,500. So, the catch up contribution is the  greater of $10,000 or 150% of $,6500 = $9,750. Beginning in 2024, if your wages from the employer sponsor of the plan exceeds $145,000, the catch up  contribution must be a Roth contribution.

STUDENT LOAN PAYMENTS. Effective for plan years beginning after December 31, 2023, a plan can allow employees to receive matching contributions based upon student loan repayments.


Existing law provides that states can create the ABLE program for a tax free  account with tax free distributions if used for qualified disability expenses if the individual was disabled prior to age 26. Effective January 1, 2026, the new law extends the date of disability to prior to  age 46. Note that the person does not have to be under age 46 in 2026, they just must be disabled under age 46.


TAX CREDITS.  Effective 2023, businesses with less than 100 employees receive an expanded credit for a portion of administrative expenses to set up a plan and for contributions to the plan.

SIMPLE PLAN CONTRIBUTIONS.  Effective 2024,  employers may make additional nonelective contributions under a SIMPLE plan, up to the lesser of 10% of compensation or $5,000 adjusted for inflation.  Also, contribution limits for SIMPLE IRA plans and SIMPLE 401(k) plans are increased.

REPLACE SIMPLE IRA PLAN WITH CERTAIN 401(K) PLANS.  Effective for plan years beginning after Dec. 31, 2023, employers may replace a SIMPLE IRA plan with a SIMPLE 401(k) plan or other 401(k) plan that requires mandatory employer contributions during a plan year.

ESOPs. Effective 2028 an S corporation can sell stock to its ESOP and defer gain on 10% of the sale proceeds.


  1. 1. Kitces:  https://www.kitces.com/blog/secure-act-2-omnibus-2022-hr-2954-rmd-75-529-roth-rollover-increase-qcd-student-loan-match/
  2. 2. Keebler Tax and Wealth Education, Inc.
  3. 3. Baker Hostetler – SECURE 2.0 Act of 2022—Congress’ Final Gift of 2022 to Retirement Plan Sponsors |
  4. 4. Fox Rothschild, Secure 2.0 A Summary of Key Changes Impacting Employer- Provided Retirement Plans.
  5. 5. Senate Summary of Secure 2.0 Act of 2022.

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