Category Archives: SECURE ACT 2.0


New federal legislation has been enacted in connection with retirement plans beginning in 2023.  Here are highlights from this law, dubbed SECURE ACT 2.0: 

1.         Raising the Required Minimum Distribution (RMD) age to 73

Savers were required to begin taking RMDs at age 72.  (An RMD is the amount of money that must be withdrawn from an employer-sponsored retirement plan, traditional IRA, SEP, or SIMPLE IRA, by owners to avoid tax consequences.) The withdrawal amount is calculated by factors such as account value and longevity. The new law raises the RMD starting age to 73 in 2023 and to 75 in 2033. 

If you turn 73 this year you must take a distribution no later than April 1, 2024. The distribution for subsequent years would need to be made by Dec. 31 of that year.  Those who start withdrawing in 2024 would need to take two distributions — one for 2023 and one for 2024.

2.         Eliminating RMDs from a Roth 401(k)

Beginning in 2024, those with Roth 401(k) accounts will no longer have to take RMDs.  This change aligns Roth 401(k)s with Roth IRAs, which don’t require distributions during one’s lifetime.

3.         Reducing RMD tax penalties

The IRS assesses a tax penalty on account owners who fail to withdraw the full amount of their RMD or who fail to take any distribution whatsoever by the annual deadline.  The new law reduces the tax penalty to 25% — from 50% — on the RMD amount that wasn’t withdrawn.  If a taxpayer corrects the mistake in a timely fashion, the penalty is reduced to 10%.  The IRS can waive penalties if savers can demonstrate the shortfall was “due to reasonable error and that reasonable steps are being taken” to remedy it.

4.         Emergency withdrawals

Beginning in 2024, savers can make 1 withdrawal of up to $1,000 a year from an IRA or 401(k) for personal or family emergency expenses and the IRS will waive the 10% tax penalty. Savers  can self-certify the need for the funds and employers can rely on an employee to self-certify an event of hardship or unforeseeable emergency to make such a withdrawal. 

5.         SIMPLE IRAs and SEPs accept Roth contributions

In 2023, SIMPLE IRAs can accept Roth contributions, and employers can offer employees the ability to treat employee and employer SEP contributions as a Roth, either in whole or in part.