Parkside Advisors

Independent Investment Management

  • Our Firm
  • Our Services
    • Overview
    • Financial Planning
    • Investment Management
      • Overview
      • Core Investment Strategy
      • Sustainable Investing
      • Customized Portfolios
    • Tax Planning
  • Our Team
  • FAQs
  • Blog
  • Client Portal
  • Contact

Retirement Plan Changes in the SECURE 2.0 Legislation

January 17, 2023 by Parkside Advisors

On December 29th, President Biden signed the SECURE 2.0 Act into law bringing changes to the retirement landscape.  While the scope of the law is broad, the new legislation impacts our clients mainly through changes to retirement plan withdrawal rules, 50 and older catch-up contributions, and new ways to add to retirement assets.

We highlight here some of the changes relevant to many of our clients:

1. Higher ages for starting Required Minimum Distributions

  • Starting in 2023, the mandatory age to begin taking Required Minimum Distributions (RMDs) increases to 73 from 72.
  • The mandatory age for RMDs will increase again in 2033 to 75.

2. Changes to catch-up (50 and older) retirement plan contributions

  • Starting in 2024, highly compensated employees must make their catch-up contributions to employer-sponsored 401(k) or 403(b) Roth accounts. This means catch-up contributions made by employees earning over $145,000 will be on an after-tax basis. Previously, catch-up contributions were tax-deferred regardless of income level. While these individuals will lose the upfront tax deferral, their Roth contributions will still benefit from tax-deferred growth and will be exempt from RMDs.
  • Employees ages 60 – 63 will be able to make larger catch-up contributions to their employer sponsored 401(k), 403(b), or 457(b) retirement plans. The new limit will be increased from $7,500 to at least $10,000 and will become effective in the 2025 tax year. The limit will depend on annual inflation and could exceed $10,000. These contributions are also subject to the highly compensated earnings threshold discussed above.

3. Excess 529 Plan funds rollovers into a Roth IRA

  • Starting in 2024, taxpayers who have maintained a 529 plan for at least 15 years will be allowed to roll over 529 plan funds to the beneficiary’s Roth IRA. Rollovers will be limited by the annual IRA contribution limit, which is currently $6,500. Taxpayers in this instance will not be subjected to Roth IRA income limitations. Aggregate lifetime rollovers from a 529 plan will be limited to $35,000 per beneficiary.  In sum, it would take six years to rollover the lifetime limit under current annual contribution limits.

4. Qualified Charitable Distributions limit to increase

  • Taxpayers over age 70.5 are eligible to make Qualified Charitable Distributions (QCDs). The QCD annual limit of $100,000 will now be indexed for inflation beginning in 2024.

5. Expansion of Roth plan options

  • Starting in 2023, employers can offer participants the option of receiving matching contributions in Roth 401(k), Roth 403(b), or Roth 457(b) accounts. Matching employer contributions applied to a Roth account would be taxable to the employee.  Before the SECURE 2.0 Act, employer matching contributions were only allowed in traditional tax-deferred accounts and not permitted for Roth retirements accounts.  Note that companies must choose to offer this as a benefit.
  • Starting in 2023 SECURE 2.0 Act allows for the creation of Roth SEP IRAs and Roth SIMPLE IRAs.

Please note that this is a selected list of items contained in the new legislation. If you have any questions regarding how these changes might affect your particular situation in 2023, please contact Parkside Advisors.

Share
Tweet
Share
0 Shares

Filed Under: Retirement, Tax Planning

About Parkside Advisors

NO INVESTMENT ADVICE
The material in this blog is for informational purposes only. You should not construe any such information or other content as legal, tax, investment, financial, or other advice. Nothing contained in our blog constitutes a solicitation, recommendation, endorsement, or offer by Parkside Advisors or any third party service provider to buy or sell any securities or other financial instruments in this or in in any other jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction.

All material in this presentation is information of a general nature and does not address the circumstances of any particular individual or entity. Nothing in the presentation constitutes professional and/or financial advice to any specific firm client, nor does any information in this presentation constitute a comprehensive or complete statement of the matters discussed. Parkside Advisors does not become a fiduciary to any participant or other person or entity by virtue of any person’s use of or access to the presentation.

The content presented represents the interests and opinions of Parkside Advisors only. Blog content also may include material obtained from third party sources. We believe all content presented in the blog is reliable and current however we provide no guarantee of accuracy. You assume the sole responsibility of evaluating the merits and risks associated with the use of any information or other content in the blog before making any decisions based on such information or other content. In exchange for using the blog, you agree not to hold Parkside Advisors, its affiliates or any third party service provider liable for any possible claim for damages arising from any decision you make based on information or other content made available to you through this site.

INVESTMENT RISKS
There are risks associated with investing. Investing in stocks, bonds, exchange traded funds, mutual funds, and money market funds involve risk of loss. Principal loss is possible. Some high risk funds may use leverage, which will accentuate gains & losses. Foreign investing involves special risks, including a greater volatility and political, economic and currency risks and differences in accounting methods. A security’s or a firm’s past investment performance is not a guarantee or predictor of future investment performance.

  • Important Notices | Client Relationship Summary | Part 2 Form ADV
  • Parkside Advisors 2040 Bancroft Way, Suite 300, Berkeley, CA 94704 | 510-883-1350
  • Copyright © 2025 Parkside Advisors
  • WordPress Website Development by HyperArts