Am I Impacted by the SECURE Act?

The SECURE Act 2.0 implements changes that affect many different areas of financial planning. Do you know if any of them impact you?

Here are some of the important changes and how they might change your financial strategies for spending, saving and giving.

SPENDING

If you are born 1951 to 1959, you must start taking distributions from your IRA, called RMD for Required Minimum Distribution, when you are 73 (those born 1960 or later get to wait until age 75):

• Consider tax planning strategies to reduce the hidden tax liability in your IRA, such as Roth conversions, which also help reduce your heirs’ tax burden, or looking for ways to reduce the overall tax liability of your portfolio in the future such as harvesting capital gains or accelerating taxable distributions.
• Other options for delaying your RMD and/or reducing the chance of outliving your money would be to put a portion of your IRA into a qualified longevity annuity contract (QLAC), which would enable you to delay taking RMDs on that portion until the age of 85. Be mindful of the new $210,000 limit (adjusted for inflation).

SAVING

If you are working and your employer offers a match on your retirement plan contributions:

• Consider whether to elect the newly allowed employer matches to Roth accounts (taxable as income).

If you have (or will have) extra funds in a 529:

• Consider transferring it to a beneficiary’s Roth IRA (if they have earned income). Be mindful of the $7,000 ($8,000 if age 50 or over) annual transfer limit (reduced by any regular contributions) and $35,000 lifetime limit per beneficiary.

If you are age 60, 61, 62 or 63 in 2025 and are working and contributing to a 401k (or other similar plan):

• Consider making increased catch-up contributions to your employer’s retirement plan in the amount of $10,000 or 150% of the applicable catch-up limit from the prior year (whichever is greater).

 GIVING

If giving to charity is part of your financial planning goals and you are at least 70 ½:

• Consider whether making qualified charitable contributions (QCDs) to a charitable remainder trust (CRT) or charitable gift annuity makes sense for your situation but be mindful of the associated limitations and costs.