SECURE 2.0 Act — Key Changes

The SECURE 2.0 Act of 2022 (enacted December 29, 2022) made sweeping changes to retirement account rules. It builds on the original SECURE Act of 2019. EA candidates must know the specific ages, dates, and dollar amounts introduced by this law.

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RMD Age Increase

Required Minimum Distributions (RMDs) must begin no later than the required beginning date (RBD). SECURE 2.0 increased the starting age in two steps:

| When Born | RMD Begins | |---|---| | Before July 1, 1949 | Age 70½ (pre-SECURE Act) | | July 1, 1949 – December 31, 1950 | Age 72 (SECURE Act 1.0) | | January 1, 1951 – December 31, 1959 | Age 73 (SECURE 2.0) | | January 1, 1960 or later | Age 75 (SECURE 2.0, effective 2033) |

Effective date for age 73: January 1, 2023 Effective date for age 75: January 1, 2033

RMDs are calculated annually based on the prior year-end account balance divided by the applicable life expectancy factor from IRS Uniform Lifetime Table.

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Reduced Penalty for Missed RMDs

Old rule: 50% excise tax on the shortfall (amount not distributed when required).

New rule under SECURE 2.0:

• Reduced to 25% for missed RMDs
• Further reduced to 10% if the missed RMD is corrected within the correction window (generally by the end of the second taxable year following the year of the missed RMD)

This change applies to RMDs due for 2023 and later.

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Roth Employer Contributions

Old rule: Employer contributions (matching, profit-sharing) had to go into pre-tax accounts.

New rule: Employers may allow employees to elect that some or all employer contributions be made as Roth contributions (after-tax). If elected, the employee includes the contribution amount in gross income in the year contributed.

This feature is optional — employers must choose to offer it.

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Emergency Savings Accounts (Pension-Linked)

SECURE 2.0 created a new emergency savings account (ESA) linked to employer-sponsored defined contribution plans:

• Eligible: Non-highly compensated employees
• Limit: Up to $2,500 per year; maximum account balance of $2,500
• Contributions are made on an after-tax (Roth) basis
• First 4 withdrawals per year are penalty-free and tax-free (since made with after-tax dollars)
• Employers may auto-enroll employees at up to 3% of compensation

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Student Loan Matching Contributions

Effective 2024: Employers may treat a qualifying employee student loan payment as an elective deferral for purposes of employer matching contributions.

• Employer can match student loan payments with 401(k), 403(b), SIMPLE IRA, or 457(b) contributions
• Employee does not have to make their own 401(k) contributions to receive the match
• Qualifying student loan = loan taken to pay qualified higher education expenses

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Catch-Up Contribution Changes

Standard Catch-Up (Age 50+)

• 401(k), 403(b), 457(b): Additional $7,500 (2024) beyond the regular $23,000 limit
• SIMPLE IRA: Additional $3,500 beyond the regular $16,000 limit

Super Catch-Up (Ages 60–63) — Effective 2025

SECURE 2.0 created an enhanced catch-up for participants aged 60, 61, 62, and 63:
• 401(k)/403(b)/457(b): Greater of $10,000 or 150% of the regular catch-up amount (indexed for inflation)
• SIMPLE IRA: Greater of $5,000 or 150% of regular SIMPLE catch-up

Age 64 returns to the standard 50+ catch-up amount.

Roth Catch-Up Requirement (Effective 2026)

High earners (wages over $145,000 in prior year, indexed) who make catch-up contributions to a 401(k) or 403(b) must make those catch-up contributions as Roth (after-tax).

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529-to-Roth IRA Rollovers

Effective 2024, unused 529 plan funds may be rolled over to a Roth IRA for the 529 beneficiary:

| Rule | Detail | |---|---| | 15-year holding requirement | The 529 account must have been open for at least 15 years | | Annual limit | Subject to Roth IRA annual contribution limit ($7,000 in 2024; $8,000 if 50+) | | Lifetime limit | $35,000 per beneficiary (cumulative) | | Earned income requirement | Beneficiary must have earned income at least equal to the rollover amount | | Income limits | Normal Roth IRA income limits do not apply to these rollovers | | Contributions excluded | Contributions (and earnings) made within the last 5 years cannot be rolled over |

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Exam Tips

> RMD ages: 73 now, 75 in 2033. Know both thresholds and when each applies. The transition affects candidates born between 1951 and 1959.

> Missed RMD penalty: 25%, or 10% if corrected promptly. The old 50% rate was one of the harshest penalties in the tax code — this change is highly testable.

> 529-to-Roth: $35,000 lifetime limit, 15-year holding period, annual limits still apply. All three conditions are exam-testable.

> Super catch-up is ages 60–63 only. Age 64 drops back to the standard catch-up rate. The exact age window is a common trap.

> Student loan matching is elective by the employer. Employees cannot force the employer to offer it.