The Impact of SECURE 2.0 in 2024 and Beyond

Passed in 2019, the SECURE Act was the most substantial retirement legislation in over a decade. It contained important changes designed to help investors save more and be better prepared for the future.

Late last year, Congress passed the SECURE Act 2.0 to build on the popular aspects of the original SECURE Act.

While the new laws will impact all savers in some ways, navigating all of the changes is a bit like putting a puzzle together, so we thought it would be helpful to outline the key provisions of the SECURE 2.0 Act that go into effect next year.

Here are Three SECURE 2.0 Provisions Starting in 2024:

1. Distributions from retirement plans for personal emergencies will be allowed penalty-free. You will be allowed one distribution per year of up to $1,000, with the choice of repaying the distribution within three years.¹
   
   
2. Individual retirement account (IRA) catch-up contributions, currently limited to $1,000 for people aged 50 and over, will be indexed to inflation, meaning that they could increase yearly based on federally determined cost-of-living increases.²
   
   
3. Roth accounts in employer retirement plans will be exempt from the required minimum distribution (RMD) requirements.²

In addition, although the original SECURE Act adjusted the distribution rules, including changing RMDs from age 70½ to 72, SECURE 2.0 made even more changes to the RMD rules. The RMD age changed to 73 in 2023 and will change to 75 in 2033. The chart below highlights those changes.³

It’s a lot to absorb! There are nuances and complexities to SECURE 2.0 that may impact your retirement and estate considerations.

If you have questions about SECURE 2.0 and how it may impact your family’s situation, please don’t hesitate to reach out. Our mission is to stay ahead of ever-evolving retirement rules to help clients become better positioned for today and the future.

<sup>1. Ascensus.com, May 24, 2023
2. Fidelity.com, April 2023
3. Foley.com, February 15, 2023</sup>

^{To qualify for the tax-free and penalty-free withdrawal of earnings, Roth IRA distributions must meet a 5-year holding requirement and occur after age 59½. Tax-free and penalty-free withdrawals can also be taken under certain other circumstances, such as the owner’s death. The original Roth IRA owner is not required to take minimum annual withdrawals.}

^{Once you reach age 73, you must begin taking RMDs from a traditional IRA in most circumstances. Withdrawals from traditional IRAs are taxed as ordinary income and, if taken before age 59½, may be subject to a 10% federal income tax penalty.}

^{This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm.}