In late December 2022, SECURE 2.0 Act was signed into law. You’ve likely heard about the sweeping changes that impact everyone from those nearing retirement to those just starting out. Below, we help break down a few key provisions—of the more than 90—that are designed to help strengthen the retirement system and better prepare Americans for retirement. 

For Those Nearing Retirement

  • Sweeping changes to Required Minimum Distributions (RMDs)
    • The required age to begin taking RMDs increases to age 73 from age 72. In 2033, the required age will increase to 75.
      • Note: If you turned 72 in 2022 or before, you will continue taking RMDs as scheduled. If you turn 72 in 2023 and have already scheduled your withdrawal, it may be time to update your plan.  
    • The penalty for not taking an RMD is reduced to 25% of the amount required to be withdrawn. The amount will be reduced to 10% if corrected within two years. 
      • Currently, the penalty for not taking an RMD is 50% of the amount required to be withdrawn. 
    • Roth accounts in employer retirement plans are exempt from RMD requirements starting in 2024.
  • Higher catch-up contributions (post-tax or “Roth” basis)
    • Starting this year, participants ages 50 and up can contribute an extra $7,500 per year into their 401(k) account. In 2025, this amount will increase to $10,000 per year for participants ages 60-63 to account for inflation. 
      • Note: Individuals ages 50 and older who earn more than $145,000 annually, will have catch-up contributions made on a Roth basis.
  • Roth matching 
    • Employers can offer employees the option to receive vested matching contributions to a Roth account
      • Prior, matching contributions in employer-sponsored plans were made on a pre-tax basis. Contributions to a Roth account are made after-tax, meaning earnings may grow tax-free.
      • IMPORTANT NOTE: RMDs from an employer-sponsored plan are required for Roth accounts until the 2024 tax year (unlike Roth IRAs).
  • Qualified Charitable Distributions (QCDs)
    • Starting this year, anyone age 70½ and older may elect a one-time gift up to $50,000 (adjusted annually for inflation) to a charitable remainder unitrust, a charitable remainder annuity trust, or a charitable gift annuity. 
      • Note: Gifts must come directly from your IRA by the end of the calendar year to be eligible.


For Those Just Starting Out

  • Automatic employee enrollment and automatic escalation
    • In 2025, businesses will be required to automatically enroll eligible employees in new 401(k) and 403(b) plans starting at a 3% contribution rate (minimum). 
    • Again beginning in 2025 for new retirement plans started after December 29, 2022, contributions will automatically increase by one percent on the first day of each plan year following a completed year of service, until the escalation reaches 10%, or no more than 15% of eligible wages. 
      • Exceptions for businesses with 10 or fewer employees and employers that have been in business for less than three years will apply. 
  • Emergency expense withdrawals from retirement account
    • Previously, a 10% tax applied to early distributions (or withdrawals) from tax-preferred retirement accounts (like your 401(k)) plan. In 2024, certain distributions will be exempt for emergency expenses. Further guidance about types of qualifying expenses is expected for this provision.
      • We often say that life happens here at SBC. This provision will be one option to cover expenses during an unforeseen personal or family events.  
      • Only one distribution of $1,000 per year is permitted, and the taxpayer has the option to repay the withdrawal within three years. No other distributions can be taken during the three-year repayment period until all amounts previously taken have been repaid. 
  • Student loan debt
    • Beginning in 2024, employers can “match” employee student payments to a retirement account
      • The desire is to give workers more incentive to save while paying off their education debt. 
  • 529 Plan
    • A 529 Plan, or education savings plan, can be rolled over to a Roth IRA after 15 years for the beneficiary. 
      • Note this is subject to annual Roth contribution limits and a lifetime limit of $35,000.

These are just a few of the many provisions that went into effect with the SECURE 2.0 Act. With legislation the size and scope of SECURE 2.0 Act, we expect additional guidance on certain provisions where the legislative text may be subject to further interpretation.

We understand that following the ever-changing legislative landscape can be hard to follow and even harder to understand. If you have any questions or want more details about how you may specifically be impacted by these changes, please reach out to your financial advisor today at

We’re here for you. 

If you are over the age of 70 ½ and give to charitable organizations, get the most out of your charitable giving at tax time.

A Brief History Charitable Giving and Tax Laws

In 2018, the Tax Cuts and Jobs Act of 2018 made it less advantageous for taxpayers to itemize deductions. Although deductions on top of standard deductions were allowed, the amount was limited. Many people deprioritized charitable giving as a tax strategy. However, recent changes to the tax law may have you rethinking your approach.

For the 2021 tax year, if you take the standard deduction, you can deduct an additional $300 as a single filer and $600 for married filing jointly filers for contributions to a qualifying charity. The most recent tax law changes for 2022 have eliminated this additional deduction in its entirety.

Current Charitable Giving Tax Opportunities

If you are at least age 70 ½, you can give through a Qualified Charitable Distribution*or a QCD. A QCD is a withdrawal from an individual retirement account (or IRA) made to a qualifying charity. Because IRA dollars have not been taxed yet, the amount taken out will be taxable as income when you make a withdrawal. However, if you take a withdrawal as a QCD, it is excludable from income.

Here’s what that means as a simplified example. If you pay 30% to federal taxes, it will cost you $100 to give directly from your IRA. If you give that $100 in cash, it will cost you $142.85 ($100 in taxes + $42.85 in taxes).

Required Minimum Distributions and Taxes

Required minimum distributions, or RMD, also play a role in determining your tax strategy. When you reach age 72, you are required by the IRS to take RMDs from your IRA. Remember that dollars in your IRA haven’t been taxed. Once you start taking RMDs, you will be required to pay taxes as ordinary income, even if you don’t need the money.

Charitable Giving + Required Minimum Distributions

It’s essential to start with an understanding of the tax implications of QCDs and RMDs, so you can plan your tax strategy. If you already make charitable contributions, consider giving with IRA dollars. Dollars taken from your IRA as a QCD will apply toward your RMD amount for the year, reducing your taxable income.

A Few Scenarios

To better understand how QCDs can reduce your taxable RMD amount, let’s look at a few hypothetical scenarios.

  • Scenario 1: Sally takes a portion of her annual RMD as a QCD. Sally’s total RMD amount for the year is $40,000. Sally makes a $20,000 QCD for her annual giving to her alma mater. This is excludable as income. Sally has a remaining RMD of $20,000 that will be taxable as income.
  • Scenario 2: Terry takes his entire annual RMD as a QCD. Terry’s total RMD amount for the year is $50,000. Terry makes a $25,000 QCD to his church for missions fund and a $25,000  QCD to local food bank. Terry has satisfied his full RMD amount by making a QCD. His taxable income is $0 rather than $50,000.
  • Scenario 3: Becky takes her entire annual RMD as a QCD and donates an additional amount. Becky’s total RMD for the year is $25,000. Becky makes a $25,000 QCD to the local animal shelter and makes an additional QCD of $5,000 to her local art museum. Becky’s RMD taxable income is $0 rather than $25,000 , and she further reduces her IRA balance with the additional QCD of $5,000, which could potentially reduce future RMD amounts.

With ever-changing tax laws, it’s important to review your tax strategy for the year ahead every January with a trusted advisor. In Scenario 2 above, if Terry had taken his full RMD of $50,000  in January and made a QCD of $14,000 later in the year, the $14,000 wouldn’t apply to his RMD. However, it would be excludable as income. If Terry had worked with an advisor, he would have planned his giving through QCDs earlier in the year and reduced his taxable income.

Ready to start planning your tax strategy? Contact us to learn more about how we can help you make the most of tax-efficient strategies.

*For more information on Qualified Charitable Distributions, please see our FAQ’s under Financial Tools.