The SECURE 2.0 Act, which was signed into law on Dec. 29, 2022, was designed to expand and simplify the benefits of saving for retirement and expand the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019. In this article, we highlight some of the SECURE 2.0 changes, many of which have gone into effect for the first time this year.

529 plan to Roth IRA rollovers—Beginning in 2024, funds from a 529 plan can be transferred to a Roth IRA, tax free, for the beneficiary of the 529 plan, subject to certain limitations. The 529 plan must have been open for at least 15 years and the eligible rollover amount must have been in the 529 account for at least five years. The rollovers are subject to the annual Roth IRA contribution limit (in 2024 this limit is $7,000, plus an additional $1,000 for taxpayers who are age 50 and older). The 529 rollover is subject to a lifetime cumulative maximum of $35,000 of transfers from a 529 plan account to a Roth IRA. This rollover option is significant as it allows for a portion (and sometimes all) of a taxpayer’s surplus 529 plan account balances which are not needed for educational expenses to be applied to retirement savings without subjecting these funds to ordinary income taxes or the 10% penalty, as might otherwise be the case.