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Exploring the Changes in the SECURE Act 2.0: A Boost for Retirement Planning Thumbnail

Exploring the Changes in the SECURE Act 2.0: A Boost for Retirement Planning


Over the past year, the SECURE Act 2.0 has brought about significant changes to retirement planning in the United States. Aimed at simplifying contributions to retirement plans and making it easier for Americans to secure their financial future, this legislative update introduces a range of provisions that impact various aspects of retirement planning.

Adjusted Distribution Rules

One of the most noteworthy changes is the adjustment of distribution rules. Under the new provisions, the age at which required minimum distributions (RMDs) from traditional retirement accounts must begin has been increased from 72 to 73. This change acknowledges the evolving landscape of retirement, with many Americans choosing to work longer and delay drawing from their retirement savings. This extra year before RMDs kick in can provide individuals with more flexibility in managing their retirement assets. In addition, for people born on or after 1/1/1960, the age requirement to start RMDs has been pushed back to age 75.

High-Income Accumulation Rules

High-income earners will also benefit from the SECURE Act 2.0, particularly starting January 1, 2025. The act increases catch-up contributions for these individuals, allowing them to boost their retirement savings. Investors aged 60 to 63 will be able to make annual catch-up contributions of up to $10,000. Current catch-up contribution amounts for investors age 50+ is $7,500. High-income earners are defined as individuals with annual earning more than $145,000. Starting in 2026, these catch-up contribution for high-income earners will be required to be Roth.

Revised Roth Rules

Another critical aspect of the SECURE Act 2.0 is the revised Roth rules. These updates expand the avenues for Roth contributions, providing individuals with more choices when it comes to tax-advantaged retirement savings.

Iowa-Specific Benefits

In addition to the SECURE Act 2.0 changes mentioned above, Iowa residents will also have unique benefits for their retirement distributions. Starting in the tax year 2023, individuals over 55 in Iowa won't be subject to state taxes on retirement account distributions. This change offers a substantial financial advantage to retirees in the state.

The SECURE Act 2.0 brings a variety of changes that have the potential to significantly impact retirement planning and savings for Americans. These new provisions aim to simplify retirement planning, encourage savings, and provide more financial security for individuals as they prepare for their golden years. To learn more about how these changes could impact you and what you can do to better prepare for retirement, reach out to our team today.