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

When advising my clients, the Secure Act 2.0 is top of mind because I prioritize empowering them with knowledge, so they are also always thinking before making any money moves, enabling them to know when to pause and call me rather than wish they had contacted me first.

While the Secure Act 2.0 is slowly unrolling, knowledge is power.

From clients that are employed and prefer to put their match in a Roth to small business owners that are interested in the up-and-coming "starter" 401(k) or new Roth options for small business retirement plans to parents that can consider rolling over extra 529 money into a Roth for the beneficiary or will be able to fund an ABLE account for their disabled adult loved ones, conversations about new laws and the possible benefits result in clients sharing stories that may have been omitted when other things seemed more important to them.

— Alissa Krasner Maizes, founder, Amplify My Wealth

There are lots of great planning opportunities wrapped up in Secure 2.0; one that is particularly useful for those with young children is the ability to convert 529 plans to Roth IRAs down the road. We probably have two to three conversations per week with parents who are concerned about “locking up” money in a 529 plan in the event their child decides against college. Maximum flexibility is super helpful in planning.

— Marc C. Shaffer, CFO, Searcy Financial

For our clients who were born in 1951, we are reviewing whether they should start taking RMD‘s anyway this year, even though they don’t need to. In some cases, it makes sense to take the withdrawal now at lower tax rates. We are looking forward to the opportunity to elect Roth treatment for employer matching contributions, but we don’t see that becoming available until much later in the year at the earliest. Many of the other features of the act will not be available until 2024, 2025.

— Daniel J. Galli, founder, Daniel J. Galli & Associates

I am actively educating clients about the major changes. Many of the changes with RMDs, IRA catch-up provisions and availability of self-employed Roth retirement plans all have an impact depending on a client's specific situation.

These changes could directly impact a client's tax situation, how they take income, or cause changes in specific plan timelines. With that said, these updates need to be reflected in a client's plan and executed according to new rules/laws in place.

If education and advice around the new Secure 2.0 items are not discussed, then many opportunities will fall into the cracks. It's important that we learn, educate and implement these changes now instead of playing catch-up later. Our clients depend on that.

— Brandon Gregg, market president and financial advisor, BBK Wealth Management

Secure 2.0 isn't changing the nature of the advice I give to my specific clients, as I enjoy focusing on retirement, the journey to and through it, as well as tax planning. The provisions have presented a bit more opportunity as it relates to time frames and limits, but I'm still advising clients to save as much as possible towards retirement.

For those already in it, we're still working to find ways to reduce taxes over their lifetime with conversions and strategic IRA use. For some clients, losing the pre-tax aspect of 401(k) catch-up will be an issue, but the advice is still to save as much as they are able to. The name of the game when it comes to planning is to consider tax ramifications as much as possible, and Secure 2.0 is giving retirement planners more headway to do that.

— Curtis Crossland, co-founder and planner, Suttle Crossland Wealth Advisors LLC