How Secure 2.0 Is Shaping Advice to Clients: Advisors' Advice

There are two prominent areas of advice to clients where Secure Act 2.0 is and will have an impact.

First, RMDs have been delayed from 72 to 73 for anyone born 1951-1959, and 75 for those born 1960 or later. For those who have the resources and can afford to not take retirement account distributions until RMD age, this gives one to three additional years to consider Roth IRA conversions to “fill up” lower tax brackets in retirement and reduce future RMDs later in life.

Second, the changes to allow Roth SEP and SIMPLE IRAs plus Roth treatment for employer matching contributions present interesting tax-planning opportunities for younger, middle-income clients and business owners. Roth contributions can make more sense for them, depending on age, income and marginal tax brackets. Higher catch-up contributions to 401(k), 403(b), 457 employer sponsored plans for those age 60-63 are interesting as well, but the requirement that they must be made on a Roth basis for those earning more than $145,000 could make it less appealing. For some, skipping catch-up contributions and adding to a taxable brokerage will prove more advisable.

— Kevin Brady, vice president and advisor, Wealthspire Advisors