This week’s theme on the Retirement Quick Tips Podcast is: SECURE 2.0 Act & The BIG Changes You Need To Know

Today, I’m talking about the significant changes to Roth accounts in SECURE 2.0 Act. It’s probably my favorite set of provisions in the new Act, and it’s important to take note of these so you don’t miss the opportunity to get more of your retirement dollars into Roth accounts and enjoy the tax-free growth and future tax-free withdrawals that come along with it. 

Employers will be able to provide employees the option of receiving vested matching contributions to Roth accounts. Previously, matching in employer-sponsored plans were made on a pre-tax basis. [go through example of this]

Now keep in mind that retirement plans and payroll providers will need to actually offer this as an option, which can take time, so it’s likely not going to be a change you’ll see right away. 

Another new opportunity if you are covered by a SIMPLE or a SEP IRA through your work is that you can now have a SIMPLE Roth account, as well as SEP Roth IRAs, for 2023 and beyond. Previously, SIMPLE and SEP plans could only include pre-tax, not Roth funds. 

However, if this applies to you, don’t get too excited. Even though you can now create and contribute to Roth SIMPLE and SEP IRA accounts beginning January 1, 2023, as Jeff Levine, writing for Kitces.com points out: “it will likely take at least some time before employers, custodians, and the IRS are able to implement the procedures and policies necessary to actually effectuate such contributions.”

When hearing of all of these positive changes to Roth accounts, you may be asking yourself, what’s the catch? Why would Congress allow more access and flexibility with Roth accounts, which lowers their tax revenue down the road. 

Well, Congress is as short-sighted as the rest of us, and as that same article on Kitces.com points out: “the changes highlight Congress’s continued march toward ‘Rothification’, perhaps in an effort to grab tax revenue now in order to make Federal budget estimates look better (or at least less bad).”

That’s it for today. Thanks for listening! My name is Ashley Micciche and this is the Retirement Quick Tips podcast.    

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