The SECURE Act 2.0, passed in late 2022, has reshaped retirement planning with significant changes that impact how individuals save, withdraw, and optimize their funds. For high earners, business owners, and those nearing retirement, these updates create new opportunities for strategic planning. Let’s explore three critical provisions—the increased age for required minimum distributions (RMDs), enhanced catch-up contributions, and changes to 401(k) plans—through the stories of three individuals who stand to benefit.
Julie: Delaying RMDs for Tax Efficiency
Julie, a high-earning executive in her early 50s, has diligently contributed to her 401(k) and is projected to surpass $1 million in savings. She’s exploring ways to manage future tax liabilities, and the SECURE Act 2.0’s increase in the RMD age from 72 to 73 in 2023 (and to 75 by 2033) provides a critical planning advantage.
Previously, retirees had to begin taking—and paying taxes on—distributions at 72. Now, Julie has additional time to execute Roth conversions while she’s in a lower tax bracket. By converting portions of her 401(k) to a Roth IRA, she can prepay taxes at today’s rates and allow funds to grow tax-free, reducing future taxable RMDs and creating a flexible, tax-efficient income source. With guidance from her financial advisor, she can use this extended deferral period to make her savings work harder.
Drew: Catching Up on Retirement Savings
Drew, a 62-year-old professional, feels behind on retirement savings and is looking for ways to accelerate contributions. The SECURE Act 2.0’s enhanced catch-up contributions provide a lifeline for individuals in his position.
Starting in 2025, workers aged 60 to 63 can contribute the greater of $10,000 or 50% more than the regular catch-up amount (adjusted for inflation) to their employer-sponsored retirement plans. This increase allows Drew to set aside significantly more during his final working years, helping him close the savings gap. By maximizing these higher limits, he can better prepare for retirement and mitigate the impact of starting later.
Blake: Enhancing 401(k) Benefits for Employees
Blake, a young entrepreneur in his 30s, knows that offering competitive compensation—including strong retirement benefits—is key to attracting top talent. The SECURE Act 2.0 introduces provisions that make it easier for small business owners like him to provide robust retirement plans.
One of the most attractive updates for Blake is the increased tax credits for small businesses that establish retirement plans, making it more affordable to offer 401(k)s. Additionally, starting in 2025, employers must implement automatic enrollment for new plans, with employees contributing at least 3%, increasing annually to a minimum of 10%. This ensures broader participation and encourages early savings.
Blake is also excited about the option of offering Roth matching contributions, which grow tax-free and provide employees with greater tax diversification. This feature makes his company’s 401(k) plan more appealing, especially to younger employees who value tax-free growth. By working with an advisor to design a competitive retirement plan, Blake is supporting his team’s financial wellness while strengthening his business’s benefits package.
Maximizing the SECURE Act 2.0’s Opportunities
These stories highlight how individuals can leverage the SECURE Act 2.0 to meet specific financial goals. The extended RMD age allows high earners like Julie to optimize tax planning through Roth conversions, reducing future taxable income. Enhanced catch-up contributions give individuals like Drew the chance to save more in their final working years. Meanwhile, business owners like Blake can take advantage of tax credits, automatic enrollment, and Roth matching to offer competitive retirement benefits.
The SECURE Act 2.0 presents significant opportunities for tailored retirement planning strategies. Whether you’re a high earner seeking tax efficiency, catching up on savings, or a business owner improving employee benefits, these updates can help you achieve your financial goals. Working with a financial advisor ensures you maximize these changes and align them with your unique situation. By staying informed and proactive, you can turn these legislative updates into actionable steps toward a more secure financial future.
Stu Caplan is Senior Wealth Strategist at Members’ Wealth, a boutique wealth management firm that offers a comprehensive approach to serving individuals, families, business owners, and institutions.
The firm’s goal is to preserve and grow its clients’ wealth to endure over time, while thoughtfully evolving its strategy to suit an ever-changing world. With over 20 years of industry experience, Stu and the Members' Wealth team thrive on bringing clarity and confidence to clients' unique situations.
Stu received his MBA from The Robert H. Smith School of Business at the University of Maryland and his bachelor’s degree from the Eller College of Management at the University of Arizona. Stu resides in Bucks County, PA with his wife and two sons. He’s an avid golfer and is thrilled that his boys have embraced the game. He also volunteers his time as a board member of the PKD Foundation and Abrams Hebrew Academy.
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