Secure Act 2.0: Reminders for 2024

December 13, 2023

On December 29, 2022, the SECURE Act 2.0 (SECURE 2.0) was signed into legislation. Many provisions included in the bill will be phased into effect over the next several years. Here are some of the notable provisions for individuals that will become effective January 1, 2024:

  • 529 to Roth IRA transfers – One of the more interesting provisions from SECURE 2.0 includes the ability to roll up to $35,000 (lifetime limit per beneficiary) from a 529 College Savings Plan
    to a Roth IRA, tax-free. There are several considerations to be aware of, including:
    • The 529 account must have been opened for at least 15 years
    • 529 beneficiary must be the same individual as the Roth IRA owner
    • Annual rollovers are subject to the current Roth IRA limits ($7,000 for 2024) and they do count towards annual contribution limits (i.e. you can’t transfer $7,000 and also contribute an additional $7,000)
    • Income thresholds that normally apply to Roth IRA contributions do not apply; however, you cannot rollover more than the beneficiary had in earned income during the year
    • Contributions or earnings made in the last five years are ineligible

*Note that while you may change the designated beneficiary on the 529 account (to transfer funds into your own Roth IRA instead of your child’s, for example), it is best to hold off on doing
this right now until we receive further guidance from the IRS on whether changing the beneficiary affects and/or resets the 15-year holding period

*Additionally, continue to monitor state legislation, as there may be states that do not conform and choose to impose taxes on transfers

  • Elimination of employer Roth RMDs – Roth assets held in an employer retirement plan will no longer be subject to Required Minimum Distributions (RMDs). This was previously a significant difference between a regular Roth IRA and a Roth account held in an employersponsored plan.
  • Surviving spouse election as employee – A surviving spouse can now elect to be treated as deceased employee for purposes of RMDs from employer-sponsored retirement plans (i.e. surviving spouse can elect to start RMDs at the deceased’s RMD age vs. their own). There may be a planning opportunity here particularly if the surviving spouse is older than the deceased spouse.
  • Mandatory Roth catch-up contributions for high wage earners – The provision that mandates qualified retirement catch-up contributions to be Roth for wage earners making
    $145,000 was originally set to be effective in 2024; however, the IRS granted a 2-year administrative transition period for this provision, such that it will not be mandated until 2026 (Notice 2023-63).

Securities offered through LPL Financial, Member FINRA/SIPC. Investment Advice offered through WCG Wealth Advisors, LLC, a Registered Investment Advisor. WCG Wealth Advisors, LLC and The Wealth Consulting Group are separate entities from LPL Financial.

Megan Wilsey is solely an investment advisor representative of WCG Wealth Advisors, and not affiliated with LPL Financial.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. WCG Wealth Advisors, The Wealth Consulting
Group nor LPL Financial provide legal, tax or accounting advice. You should consult your own tax advisor.