The Retirement-related Provisions of SECURE 2.0

President Joe Biden signed into law the Setting Every Community Up for Retirement Enhancement (SECURE) Act 2.0 at the end of 2022.  In my opinion, the best provision of SECURE 2.0 is the ability to convert leftover 529 plan balances tax-free to Roth IRA accounts in the name of the beneficiary (student).  But SECURE 2.0 also contained numerous sections related to retirement.  Among them:

It immediately raised the age at which required minimum distributions (RMD's) from IRA's and retirement plan accounts must begin from 72 to 73.  And for those of us born on or after January 1, 1960, the RMD age is 75.  This change helps retirees who don't need RMD's to meet current living expenses, as it allows for additional years of tax deferral.  It may also give retirees a longer window to perform Roth conversions in the low-tax years before RMD-related taxable income kicks in.

Starting this year, participants in 401k, 403b and governmental 457b retirement plans who attain ages 60 through 63 during the year will be able to make a larger-than-usual catch-up contribution.  In 2025, this amount will be $11,250, or 150% of the $7,500 catchup contribution permitted to other workers older than age 50.  These amounts will then be  indexed for inflation going forward.  Participants aged 60-63 in SIMPLE IRA plans will also be able to make larger catch-up contributions.  (It's unclear to me why legislators didn't seem to think workers reaching ages 64 and older don't deserve similar opportunities to catch up on their retirement savings).

As it now stands, retirement plan participants can choose whether they wish to make their catch-up contributions to their pre-tax or to their Roth (if offered by the plan) accounts, or to a combination of both.  SECURE 2.0 was to have changed this starting in 2024, forcing employers to place catch-up contributions from "higher-paid" employees (those with more than $145,000 in wages, and then indexed for inflation) into Roth accounts.  Because some plan sponsors don't yet offer a Roth feature, and because of feedback from employers and employees alike, the IRS has delayed implementation of this provision until 2026.  And with the new administration, who knows what will become of it.