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Changes in the SECURE 2.0 Act You Should Know

By: Eli Workman, Financial Planner

The SECURE 2.0 Act was signed into law in 2022, to create dozens of comprehensive retirement-related provisions to ensure individuals can be financially secure and feel more empowered in their retirement. Congress is consistently adding and changing rules that could affect how you and your family handle your retirement accounts. In this article, we will go through the major changes that are coming to the SECURE 2.0 Act in 2024 in hopes that one of them can help you save more efficiently for your retirement.

Let’s start by looking at changes that might affect you in 2024. First, Roth 401(k)s, 403(b)s, and 457 plans are no longer subject to Required Minimum Distributions (RMDs) just like Roth IRAs. This can be beneficial if your retirement plan offers a Roth option as it would allow you to keep the funds in the plan rather than having to roll them over into a Roth IRA.

Another big change in 2024 is that you can now roll up to $35,000 held in a 529 education savings plan into a Roth IRA. This is a lifetime limit and has a few restrictions:

  1. The 529 account must have been in place for at least 15 years.
  2. Funds must roll directly to the beneficiary of the 529 account’s Roth IRA.
  3. Any contributions made to the 529 account made in the last 5 years, plus any earnings on those contributions, are not allowed to be rolled into a Roth IRA.
  4. The amount rolled into the Roth IRA must follow the annual contribution limits on a Roth IRA ($7,000 for 2024, plus $1,000 for those 50 or older).

As a reminder, you can take more than the $35,000 limit into a Roth IRA as a non-qualified distribution but doing so will make the earnings on that distribution subject to income tax and a 10% penalty.

If you are an individual with student loans, in 2024 your employer can make payments towards your loan on your behalf, even if you aren’t contributing to your retirement plan. The only stipulation is that your employer can only match what you have paid towards your student loan debt each year.

There will also be small changes in Qualified Charitable Distributions (QCDs) and Traditional/Roth IRA catch-up contributions. The maximum amount you can contribute to QCDs will now increase based on the inflation rate. The limit in 2024 has also increased by $5,000 to $105,000. The Traditional and Roth IRA catch-up contributions may now be indexed to the inflation rate in the future but for now the 2024 catch-up contribution limit for those 50 or older remains at $1,000.

The Secure 2.0 Act can be confusing at times for those who don’t closely follow the amendments but now knowing what’s changing in 2024, you can be better prepared for you and your family’s future. If you have any questions, comments, or concerns with your retirement plan or if you need to make any changes, please feel free to reach out to me!





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