The SECURE Act 2.0: The Most Impactful Provisions #10 — Moving 529 Assets to a Roth IRA
Key Takeaways Prior to the SECURE Act 2.0, if a 529 plan beneficiary did not use all of the funds for qualified education expenses (for example, the beneficiary graduated without using all of the funds in the 529), the options for withdrawal were not particularly attractive. However, under the new law, those “excess’ funds can […]
The SECURE Act 2.0: The Most Impactful Provisions #9 — Roth Treatment for Catch-up Contributions for Higher Compensated
Key Takeaways Prior to the SECURE Act 2.0 all older participants, regardless of compensation level, could deduct their catch-up contributions. However, under the new law—beginning in 2024—participants who earn more than $145,000 will only be able to make Roth catch-up contributions. As a result, those catch-up contributions will be taxable to those participants, but the […]
The SECURE Act 2.0: The Most Impactful Provisions (#5-Catch-up Contributions for Higher Compensated Must be Roth Contributions)
Key Takeaways The SECURE Act 2.0 requires that catch-up contributions for higher compensated participants be treated as Roth deferrals. This provision is effective for tax years beginning after December 31, 2023 (that is, in 2024 for calendar year taxpayers). Unfortunately, due to a drafting error in the legislation, the provision in the Code that permits […]
The SECURE Act 2.0: The Most Impactful Provisions (#4–Optional Treatment of Employer Contributions as Roth Contributions)
Key Takeaways The SECURE Act 2.0 permits plan sponsors to give participants the option of receiving employer contributions on a Roth basis. This provision is effective on the date of enactment, December 29, 2022. However, the option may not be as attractive as it first appears, since the matching and nonelective contributions must be fully […]