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Secure 2.0
Benefits of SECURE 2.0 for Wealth and Retirement Advisors
Learn more about the planning incentives SECURE 2.0 offers for your clients—including small business owners, parents/grandparents, retirees, and retirement plans.
While SECURE 2.0 is typically thought of as exclusively retirement plan legislation, it also includes several provisions that present important financial planning considerations for individuals, including parents and grandparents saving for their children/grandchildren's education, and retirees. The legislation also includes incentives for small business owners to offer retirement plans to their employees.
Some of these provisions are already available, and some are available beginning January 1, 2024, presenting important planning considerations for both savers and employers and providing an additional opportunity for you to engage and educate your clients.
It’s easier for small business owners to offer retirement plans
Small business owners may not be aware of the financial incentives enacted by SECURE 2.0 that make it cheaper and easier to offer a retirement plan for their employees. The legislation helps provide a valuable benefit for attracting and retaining employees—potentially differentiating their business from other small businesses and leveling the playing field with larger businesses.
In addition, the legislation empowers small business owners to save for their own retirement in a tax-advantaged way and diversify their net worth, encouraging additional conversations about investment and retirement savings strategies with your clients.
| Opportunity | Description |
| Starter 401(k) plans for employers with no retirement plan | Permits a small business owner who does not sponsor a retirement plan to offer a starter 401(k) plan (or safe harbor 403(b) plan). |
| Modification of credit for small employer pension plan start-up costs | Increases the start-up credit from 50% to 100% for small business owners with up to 50 employees. Additional credit provided based on employer contribution. |
| Small financial incentives for contributing to a plan | Enables employers to offer de minimis financial incentives, not paid for with plan assets—such as low-dollar gift cards—to boost employee participation in workplace retirement plans.1 |
| SIMPLE and SEP Roth IRAs | Allows SIMPLE IRAs to accept Roth contributions. Also allows small business owners to offer employees the ability to treat employee and employer SEP contributions as Roth (in whole or in part). |
| Military spouse retirement plan eligibility credit for small employers | Provides small business owners a tax credit with respect to their defined contribution plans if they allow military spouses to participate, with certain requirements. |
Parents and grandparents can transfer unused 529 funds
Most likely, many of your clients want to save for their children or grandchildren’s education, which is typically done by investing money in a 529 college savings plan. To alleviate the concern that any unused savings would be stuck in the plan, SECURE 2.0 allows the money to be used beyond college.
Beginning January 1, 2024, your clients can roll over money in a 529 plan to a Roth IRA for the beneficiary as long as the 529 plan has been open for 15 years or more and the money and earnings have been in the plan for at least five years.2 This means they can consider continuing contributions to a 529 plan during the student’s undergraduate years in anticipation of graduate school, knowing there’s still a benefit if the funds aren’t used for that.
Retirees have more flexibility in managing their savings
SECURE 2.0 increases the required minimum distribution (RMD) age from 70½ to 73, delaying the point at which a retiree is required to withdraw pre-tax savings and include it in their taxable income. This change creates an opportunity to ensure your clients’ investment and withdrawal strategies take the extended time frame into account. It can also lead to conversations about investments, asset allocation, and tax-efficient withdrawal strategies, to name a few.
| Opportunity | Description |
| For Age 70½ and older: | |
| One-time qualified charitable donation (QCD) election to a split-interest entity | An ability for donors to make a QCD of up to $50,000 to fund one of either a charitable remainder unitrust, charitable remainder annuity trust, or charitable gift annuity. |
| For All Retirees: | |
| Increase in age for required beginning date for mandatory distributions | Increases the required minimum distribution age to 73 starting on January 1, 2023, and to 75 starting on January 1, 2033. |
| Qualifying longevity annuity contracts (QLAC) | Repeals the 25% limit and allows up to $200,000 (indexed) to be used from an account balance to purchase a QLAC. |
| Roth plan distribution rules | Starting January 1, 2024, eliminates the pre-death distribution requirement for RMDs in Roth accounts in employer plans. |
| Reduction in excise tax on certain accumulations in qualified retirement plans | Reduces the penalty for failure to take RMDs from 50% to 25%; and if a failure to take a RMD from an IRA is corrected in a timely manner, the excise tax on the failure is further reduced from 25% to 10%. |
Retirement Plans
SECURE 2.0 includes additional considerations for employers who sponsor a retirement plan and their participants, presenting an opportunity to help them understand the changes and evaluate new features that are available. Several of these changes are required, for example, relying on participants to certify that hardship distribution conditions are met, while others are optional, for example, offering emergency savings accounts or student loan matching beginning in 2024. Review SECURE 2.0: Benefits for Individuals and Retirement Plans for more details on all of the provisions applicable for employers.
SECURE 2.0 was designed to help more people prepare for retirement and it also provides additional financial planning considerations for your clients. Take this opportunity to talk with your clients about how they can take advantage of these benefits.
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SECURE 2.0: Benefits for Individuals and Retirement Plans
Learn more about SECURE 2.0—including benefits for small business owners, parents/grandparents, retirees, participants, and employers — and educate your clients on the financial and retirement planning considerations the legislation provides.
All information is accurate as of November 1, 2023. Additional guidance or regulations may be issued after this date that change/clarify individual provisions.
1 For plan years beginning after December 29, 2022.
2 This amount counts toward the year’s allowable contribution limit to the Roth IRA and cannot exceed that year's allowable contribution limit.
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