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How Will SECURE ACT 2.0 Changes Affect My Family? Thumbnail

How Will SECURE ACT 2.0 Changes Affect My Family?

Retirement Taxes Trending Topics

What does SECURE stand for?

Formally known as “The Setting Every Community Up for Retirement Enhancement (SECURE) Act” and passed in 2019.

SECURE 2.0, enacted in late December 2022, contains endless provisions, rolling out over the next 5 years, in its 4,100+ pages that may or may not matter to you and your family.

Below are the details we believe will impact you:

529 Plans

 You may now roll 529 Plan funds into a Roth IRA (with limitations)

  • Plan must exist for at least 15 years
  • Contributions must be made 5 years before rolling
  • Subject to annual Roth contribution limit up to $35,000 cumulatively


What is the last thing your children want to do when they get their first paycheck?


Now, unused 529 funds can be repurposed for your child’s ROTH. There is less concern of overfunding a 529, and you can give them a boost for the future by growing their retirement account for decades.

The 529 must be in existence for 15 years to take advantage of the Roth opportunity so start funding a 529 as early as feasible.

Required Minimum Distribution (RMD) Age

The designated RMD age was increased to 72 (from 70-1/2) in the 2019 SECURE Act 1.0.

SECURE 2.0 increases the age at which we must start RMDs. The revised ages are:

Birth Year

Starting Age for Required Minimum Distributions (RMDs)

1950 and before

Age 72* (still 70-1/2 if you turned 70-1/2 prior to 2020)


Age 73

1960 and beyond

Age 75

What this means?

  • We can wait longer before the government forces us to start taking from qualified accounts (and taxing us!)
  • More time to lower our lifetime tax rate through Roth conversions 


Uncle Sam takes the requirement to make RMDs in a timely manner seriously. Failure to take your RMDs has historically resulted in hefty, sharkish penalty rates. The penalty for not taking enough was 50% of the shortfall. SECURE 2.0 provides some reprieve.

The stated penalty is ‘only’ 25% of the missed distribution. Assuming the error is corrected in a timely manner, the penalty drops to 10%.

Roth Provisions

  • Catch-up Contributions:
    • Employees 50 and over making above $145,000 must make catch-up contributions as ROTH instead of pre-tax. This will likely force employers to offer ROTH options within retirement accounts.
  • Roth Contributions are now available for SIMPLE plans and SEP-IRAs.
  • Employer matching to ROTH accounts will be allowed (previously limited to traditional accounts).
  • Unused 529 balances may roll into ROTH IRAs in certain instances.

Other Key Provisions

  • IRA catch-up contributions will rise with inflation
  • Enhanced support for special situations including:
    • Expansion of eligibility to ABLE accounts for special needs
    • Provisions in event of disaster (Qualified Disaster Recovery Distributions)
    • Options for victims of domestic abuse
    • Emergency Withdrawals from retirement accounts (limit = $1,000)
  • Emergency Savings Plans (income based) with possibility of an employer match
  • Student loan payments now may qualify for employer match eligibility

In Summary

SECURE 2.0 encourages future saving with associated tax incentives. Further, it gives us greater optionality to save in both Traditional and ROTH accounts. We encourage you to investigate the rules yourself or ask your trusted professional.

Because nobody knows exactly what the future holds!

To living your ideal life,
The Paradigm Team

Additional Reading

Paradigm Advisors is a fee-only financial planning firm based in Dallas, Texas and Fayetteville, Arkansas. Paradigm Advisors provides comprehensive financial planning and investment management services to help clients organize, grow and protect their wealth throughout life’s journey. Paradigm specializes in advising well-established career executives through financial planning and investment management. As a fee-only fiduciary and independent financial advisor, Paradigm never receives commission of any kind. Paradigm is legally bound by certification to provide unbiased and trustworthy financial advice.