Retirement Planning Under SECURE Act 2.0

Updated: Apr 15

By: Steven J. Rosenthal, CPA, CFP, JD



On March 29, 2022, the U.S. House of Representatives approved the Securing a Strong Retirement Act of 2022, also known as SECURE Act 2.0. This bill has bipartisan support in both the U.S. House and Senate, so it is likely to be enacted. The bill generally enhances the ability of wage earners to contribute to 401K plans and IRA plans, but it also gradually raises the age at which required minimum distributions (RMD’s) are required to be taken from pre-tax accounts from age 72 to age 75.


This feature is particularly valuable to retirement savers with large balances in pre-tax retirement accounts because it expands the window when withdrawals can be made without penalty beginning at age 59½. It may make sense to withdraw funds from pre-tax retirement accounts after age 59½ even when the funds are not essential for a family’s cash flow. While the funds can be used to provide for early retirement, it may also be beneficial to convert these pre-tax funds to Roth IRA accounts that can reduce taxable income for determining Medicare Part B and D premiums and Social Security benefits taxation. In 2022, Medicare premiums Part B and D could total up to $486.10 per month, and up to 85% of Social Security benefits could be taxable.


For a detailed discussion of the retirement planning strategy, please see the article



 

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