Setting Every Community Up for Retirement Enhancement

On December 29, 2022 President Biden signed into law the Consolidated Appropriations Act of 2023 outlining $1.7 trillion in federal spending for the fiscal year ending September 30, 2023. Included in this bill is the Setting Every Community Up for Retirement Enhancement (SECURE) Act 2.0 which aims to make it easier for Americans to build retirement savings. Among the nearly 100 provisions, some key points include:

Effective in 2023:

Required Minimum Distribution Starting Age

The Required Minimum Distribution (RMD) age is the date you are federally required to begin withdrawing funds from any retirement account (except Roth versions). The starting age has increased from 72 to 75 allowing more people to save for retirement longer. The new ages are as follows:

  • Age 73 for those born between 1951 and 1959
  • Age 75 for those born in 1960 and beyond
  • If you turn 72 in 2023, your RMD is not due until 2024

Required Minimum Distribution Penalty

While accounts here at Rockland Trust are monitored carefully, this provision may apply if you have accounts outside of our purview. The penalty for missed RMDs will be reduced from 50% of the distribution amount to 25%. In addition, the penalty can be further reduced to 10% if it is corrected by the earliest of:

  • When a notice of deficiency is mailed to the taxpayer
  • When the tax is assessed by the IRS
  • When you correct the shortfall during a two year correction window

Roth Employer Match

Employers can now allow employees to have their matching and non-elective contributions (funds contributed directly from an employer’s account excluding profit-sharing) be added as Roth contributions. However the amounts will be included in gross income and taxed as such.

Early Withdrawal Exceptions

The age 50 exception for public safety workers to take early withdrawals without penalty from their work retirement plan accounts has now been expanded from only government employees to include private sector firefighters, as well as state and local corrections officers. The early withdrawal without penalty has also expanded to those who served in those positions or public positions for 25 years or longer.

Elimination of Roth 401(k) Required Minimum Distribution

A Required Minimum Distribution will no longer be required from a Roth 401(k), thus putting them on equal footing with Roth IRAs. If you have already started taking RMDs, the language of the provision indicates you can stop.

Effective in 2024:

Catch-up Contributions

A catch-up contribution is allowed for an investor who is 50 years or older. If your taxable wages are greater than $145,000 and you wish to have a 401(k) catch-up contribution to a retirement savings plan, it must be contributed to the Roth portion of your 401(k). In other words, that contribution can no longer be sheltered from tax. One important section of this provision states that if there is no Roth catch-up option in the employer retirement plan, then NO catch-up contributions are allowed for any wage earners participating in the company’s plan. The IRA catch-up contribution amount, which is currently set at $1,000, will be indexed for inflation in increments of $100.

Rollover of 529 Plan to Roth IRA

Beneficiaries of 529 accounts that have been open for 15 years or longer AND have not had contributions in the prior 5 years can move 529 assets directly into a ROTH IRA, so long as:

  • The Roth IRA owner must have earned income at least equal to the amount of the rollover
  • The amount transferred each year cannot exceed the IRA contribution limit
  • Maximum lifetime transfer is limited to $35,000

Surviving Spouse Required Minimum Distribution Options

If a surviving spouse is younger than the deceased spouse, he/she can choose to treat the deceased retirement account as their own which means:

  • Required Minimum Distributions can be delayed until the deceased spouse would have reached RMD age
  • The RMDs will be calculated using the Uniform Lifetime Table (spreads payments out longer than the Single Lifetime Table)
  • If the surviving spouse dies before RMDs begin, the surviving spouse's beneficiaries will be treated as though they were the original beneficiaries

Qualified Charitable Distribution (QCD)

A QCD is a direct transfer from an IRA to a charity which can be counted toward the annual RMD. Because it is paid directly to the charity, the QCD is excluded from taxable income. The QCD limit will be linked to inflation for the first time ever, increasing from its $100,000 limit.

Small Business Provisions

For small business owners or employees of a small businesses, SIMPLE 401(k)s and SIMPLE IRAs are enhanced as follows:

  • For employers with 25 or fewer employees, the deferral and catch-up limits will increase by 10%
  • For employers with 26 to 100 employees, the same enhanced deferral limits will apply if employers increase their non-elective contributions to 3% or their matching contributions to 4%, (normally 2% and 3%, respectively)
  • A new type of employer-sponsored plan, known as the “Starter 401(k)” plan will be available for small business owners with no retirement plan. This plan will require auto-enrollment (unless the employee opts out), allow for only employee deferrals (no match), and limit deferrals to no more than the IRA contribution limit at the time

Effective in 2025:

Catch-up Contributions

In 401(k) type plans, participants who turn 60, 61, 62 or 63 in 2025 or beyond, will have the option to make a catch-up contribution of up to either $10,000 annually or 150% of the dollar amount that is in effect for the prior year. This same provision applies to a SIMPLE IRA, and the amounts will be either $5,000 annually or 150% of the regular catch up amount. In 2026, these amounts will be adjusted with a cost-of-living adjustment (COLA).

Effective in 2026:

Achieving a Better Life Experience (ABLE) Accounts

The eligibility for setting up an ABLE account for someone with disabilities has been expanded to include persons disabled prior to age 46. This is a change from the current age of 26, and it does not appear that the disability had to occur prior to 2026.


The SECURE Act 2.0 includes several additional provisions, many of which the IRS and Department of Labor are expected to clarify in the coming months.

One such area awaiting clarification is the IRS regulation regarding inherited IRAs that have already entered RMD status. Rest assured that Rockland Trust has its pulse on this proposal, and we will update our clients accordingly.

If any of these changes pertain to you, or you would like an additional explanation of any of the provisions discussed, please reach out to a member of your relationship team.


IMPORTANT DISCLOSURES: Broadridge Investor Communication Solutions, Inc. does not provide investment, tax, legal, or retirement advice or recommendations. The information presented here is not specific to any individual's personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

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