Important Updates Regarding Roth IRAs Under SECURE Act 2.0

We are excited to bring your attention to some significant developments regarding Roth IRAs and the recent SECURE Act 2.0. This legislation introduces key provisions that could greatly impact your retirement and financial planning strategies. Below, we outline the five main provisions related to Roth accounts and provide actionable steps for you to consider.

1. 529-to-Roth IRA Rollovers: SECURE Act 2.0 now allows penalty-free rollovers from 529 college savings plans to Roth IRAs, under certain limitations. This opens an opportunity for encouraging Section 529 contributions and optimizing your retirement planning.
2. Employer Matching Contributions: The Act enhances Roth retirement options by enabling employer matching and non-elective contributions to be directly made to a Roth retirement plan. This change offers an additional way to grow your Roth accounts, taking advantage of employer contributions.
3. Catch-up Contributions for High Earners: High-wage earners will be required to use the Roth option for catch-up contributions starting in 2024. However, certain nuances exist, and it’s crucial to understand how this provision may impact your retirement strategy.
4. Roth SIMPLE and SEP Plans: As of 2023, Roth contributions are now allowed for Savings Incentive Match Plans for Employees (SIMPLE) IRAs and Simplified Employee Pension (SEP) IRAs. This expansion offers valuable options for business owners and employees in smaller businesses.
5. No RMDs for Employer Roth Accounts: Effective from 2024, RMDs will be eliminated from Roth 401(k), 403(b), and 457(b) plans. This change could reshape distribution strategies and prompt discussions on tax planning.

As always, we are here to support you in making informed decisions that align with your financial goals. If you have any questions or would like to explore these provisions further, please don’t hesitate to reach out. Your financial well-being remains our top priority, and we look forward to guiding you through these changes.

SERVICES WE OFFER RELATED TO THIS TOPIC

The information contained in this post is for general use and educational purposes only.  However, we do offer specific services to our clients to help them implement the strategies mentioned above.  For specific information and to determine if these services may be a good fit for you, please select any of the services listed below. 

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