What you need to know about the retirement enhancement act and how your clients can be impacted.
The Setting Every Community Up for Retirement Enhancement (SECURE) Act has reshaped the retirement landscape not once, but twice. First passed in 2019 and followed by an extensive update in late 2022, these laws are packed with implications for tax professionals advising retirement-age clients, small business owners, and estate planners [link to real estate blog post].
Here’s a breakdown of the most important changes between SECURE Act 1.0 and SECURE Act 2.0 — and what they mean for your clients.
1. Increases for Required Minimum Distributions (RMDs)
In 2019, the SECURE Act 1.0 increased RMDs age from 70½ to 72 for individuals turning 70½ after January 1, 2020.
Now, SECURE Act 2.0 further increased RMD age to:
o 73 for individuals turning 72 after January 1, 2023.
o 75 for individuals turning 74 after January 1, 2033.
Tip: Adjust retirement distribution strategies and client communications to reflect phased-in RMD age increases.
Add Pull Quote: [Get the full SECURE Act 1.0 / 2.0 breakdown during our webinar. Register today. Add URL for webinar when ready.]
2. Inherited IRAs and the 10-Year Rule
The SECURE Act 1.0 eliminated “stretch IRA” for most non-spouse beneficiaries and required account depletion within 10 years of the account owner’s death.
Now, SECURE Act 2.0:
· Clarifies RMD obligations within the 10-year window for certain beneficiaries (e.g., those subject to annual RMDs during the 10-year period).
· Continues to issue guidance on timing and penalties.
Tip: Be alert to client-specific RMD rules based on beneficiary type — spouse, minor, disabled, etc. — and ensure compliance with evolving IRS guidance.
3. Catch-Up Contributions
The SECURE Act 1.0 allows individuals aged 50 and older to make catch-up contributions to retirement accounts like 401(k)s and IRAs, enabling them to save more for retirement. It set the stage for further enhancements under SECURE Act 2.0.
Now, SECURE Act 2.0:
· Workers aged 60 to 63 can make higher catch-up contributions (up to $10,000 or 150% of the regular catch-up, whichever is greater).
· Starting in 2026, catch-up contributions for those earning $145,000+ must be Roth contributions.
Tip: Help clients strategize higher catch-up options and potential Roth tax impacts based on their income level.
4. Small Business Retirement Incentives
SECURE Act 1.0 introduced tax credits for establishing retirement plans.
Now, SECURE Act 2.0:
· Will allow expanded and new credits:
o Up to 100% of startup costs for businesses with 50 or fewer employees.
o New credit for employer contributions in the first 5 years.
Tip: Encourage small business clients to take advantage of these enhanced tax credits to start or expand retirement offerings.
5. Student Loan Matching Contributions
SECURE Act 1.0 had no provision for student loan-related retirement incentives.
Now, SECURE Act 2.0:
· Employers can match student loan payments with retirement plan contributions, treating them as if they were elective deferrals.
Tip: A valuable planning point for younger clients and employers seeking to attract talent with student debt benefits.
As a tax professional, understanding both versions of the SECURE Act is essential for proactive planning. Whether advising on retirement withdrawals, Roth strategies, or small business tax credits, these changes have real financial consequences for your clients.
Last tip: Watch our recent webinar where you’ll get the full breakdown and learn how SECURE Act 1.0 and 2.0 reshape retirement planning.
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