Tax Planning Opportunities from the SECURE Act 2.0

February 15, 2023

At the end of last year, the long-awaited SECURE Act 2.0 of 2022 (“the Act”) was passed by Congress and signed into law.  As an update to the “Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019” the Act expands on the earlier provisions with a continued goal to encourage retirement savings and expand the opportunities available to individuals centered around contributions and eventual distributions.

Effective January 1, 2023, the Act includes many new and revised provisions, with the most notable related to the following planning issues which we will be reviewing with our clients:

Changes to retirement account required minimum distributions (RMDs):

  • Starting in 2023, the new required start year for retirement account required minimum distributions (RMDs) has been delayed to age 73 (from age 72), and starting in 2033 the required start year will be delayed to age 75.
  • The penalty assessed for previous RMD amounts not taken has been reduced from 50% to 25%. This penalty will be further reduced to 10% if the IRA owner withdraws the amount not taken and submits a corrected tax return in a timely manner.
  • Beginning in 2024, RMDs will no longer be required from employer sponsored plan Roth accounts.

Increase to retirement account catch-up contributions:

  • Starting in 2025, the age-based annual catch-up contributions allowed for 401(k), 403(b) and 457(b) plan participants 50 or older will increase and apply to participants ages 60-63. In most cases, the catch-up contribution will bump up to $10,000 and be indexed for inflation annually.
  • There is an exception to these increased catch-up amounts: Plan participants who earned $145,000 or more in the prior calendar year will be required to make all catch-up contributions into a Roth plan account. In other words, for those participants, catch-up amounts will be made after-tax and will not receive the typical tax deduction that pre-tax contributions receive.
    • Beginning in 2024, IRA’s catch-up contribution limit for ages 50 or older of $1,000 will be indexed for inflation and could therefore increase each year.

529 plans:

  • Starting in 2024, 529 plan accounts held for 15 years or longer are eligible for the owner to choose to roll assets from the plan into a Roth IRA in the name of the beneficiary.
  • These Roth IRA rollover contribution amounts from a 529 plan cannot exceed the annual Roth IRA contribution limits each year and cannot exceed a total lifetime limit of $35,000.

Employer matching Roth contributions:

  • Employers can now provide employees with the option to receive matched contributions to a Roth plan account; however, it may take time for employers to be set up to offer this benefit. Up until now, employer matching contributions have been made on a pre-tax basis.

Qualified Charitable Distributions (QCDs):

  • Beginning in 2023, individuals age 70.5 or older may elect to use part of their annual QCD limit (currently $100,000) to make a one-time gift, limited to $50,000 adjusted annually for inflation, to a charitable remainder unitrust, a charitable remainder annuity trust or a charitable gift annuity.
  • In considering this new option, it will be important for IRA owners to weigh the cost of setting up a charitable trust entity against the tax benefit of using this technique to make a charitable gift out of an IRA at the allowed gift level.

If you would like to see how any of the above planning topics apply to your situation, please reach out to your Litman Gregory Wealth Management advisor to discuss them further. We can also coordinate with your tax advisor to determine how these changes may impact you and your tax preparation.


In addition to the changes that came as a result of the SECURE Act 2.0, several other tax related changes went into effect that may impact your tax planning situation. Here are a few key highlights for changes effective starting 2023:

  • 401(k), and other employer-sponsored plan contribution limits: The annual contribution limit for 401(k)s and similar plans increased to $22,500 (up from $20,500). Those age 50 or older can still make an extra “catch-up” contribution of now $7,500, for a total of $30,000.
  • IRA contribution limits: Traditional IRA and Roth IRA contribution limits (combined) increased to $6,500, or $7,500 with the catch-up for those age 50 or older. The modified adjusted gross income limitation to make Roth IRA contributions also increased to $153,000 for those filing single, and $228,000 for those filing joint tax returns.
  • Annual gift tax exclusion limits: The annual amount that any individual can give to another individual without the gift being reportable to the IRS as a taxable gift (or require the use of part of a lifetime gift and estate tax exemption amount) is now $17,000 (up from $16,000 in 2022).
  • Estate and gift tax exemption limits: The federal estate and gift tax exemption amount is now $12.92 million per person, up from $12.06 million in 2022. However, it is important to note that as the estate tax law currently stands, this exemption amount will “sunset” after 2025 and revert to the 2016 limit of $5 million, indexed for inflation.
Important Disclosure
These materials have been provided by Litman Gregory Wealth Management, LLC (“LGWM”) for informational purposes only. No statement herein is to be construed as a solicitation or recommendation to buy or sell a security. The information contained herein has been derived from sources that we believe to be reliable; however, we do not make any representation as to the accuracy, timeliness, suitability, completeness or relevance of any information. Information contained herein is current as of 12/31/2022. It is subject to legislative changes and is not intended to be legal or tax advice. Consult a qualified tax advisor regarding specific circumstances. This material is furnished ‘as is’ without warranty of any kind. Its accuracy and completeness are not guaranteed, and all warranties expressed or implied are hereby excluded.
For additional information about LGWM, please consult the firm’s Form ADV disclosure documents by contacting [email protected] or through this link.


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