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What Does the Secure 2.0 Act Mean for Retirement Planning?

In recent years, Congress has continued to push for changes to retirement accounts as they look for new ways to encourage retirement saving and create tax streams for the budget. Most recently, that includes the Secure 2.0 Act.

The Secure 2.0 Act was passed by Congress and signed by President Biden in the final days of 2022 as part of the 2023 Federal Omnibus Bill. The omnibus bill was more than 4,000 pages, included $1.7 billion in spending, and builds on the original Secure Act of 2019, which was the first major change to retirement plans in several years and opened the door for continued retirement plan discussions.

In the Secure 2.0 Act, there are dozens of changes that could affect retirement savings going forward. Here are some of the ones we believe are particularly important:

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Changes to Required Minimum Distributions (RMDs)

The 2019 Secure Act increased the RMD age from 70.5 to 72, which is the age retirement account owners are required to start taking distributions from retirement accounts. The Secure 2.0 Act took this another step and increased the RMD age to 73 years in 2023 and will eventually move this age to 75. 

The Secure 2.0 Act also removes the RMD requirement for employer retirement accounts that allow Roth contributions. This essentially treats Roth dollars the same whether they are in an IRA or an employer-sponsored retirement account like a 401(k). 

What this means for retirement savers:

By increasing the RMD age and removing the RMD requirement in employer retirement accounts, savers will be allowed to delay distributions and the corresponding taxes on these distributions. For retirement account owners who can afford to push back distributions, there may be opportunities to strategically plan out distributions during lower-income years prior to the start of RMDs. 

529 Plan Transfers to Roth IRAs

For years, individuals have been using 529 plans to save for their children and grandchildren’s education expenses. Occasionally, they save too much and wonder what to do with the excess funds. Currently, distributions from 529 plans not used for educational expenses are subject to income tax and a 10% penalty. The Secure 2.0 Act allows savers to rollover these dollars to a Roth IRA for the benefit of the beneficiary. 

What this means for 529 savers and beneficiaries:

If several conditions are followed, the 529 beneficiary (typically a child or grandchild) will be allowed to rollover up to $35,000 from the 529 to their Roth IRA during their lifetime. 

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Increased Catch-up Contributions for Retirement Accounts

Catch-up contributions to retirement accounts have been around for decades to allow savers 50 years and older to put additional savings into their retirement accounts. Secure 2.0 Act made a few changes to this process. 

What this means for retirement savers:

  • In 2024, retirement savers in employer plans such as a 401(k) or 403(b), who are aged 60 to 63, will be allowed to increase their savings beyond the normal catch-up contribution. 
  • Under prior law, catch-up contribution limits were indexed to allow them to grow with inflation – except for IRA catch-up contributions. Secure 2.0 Act addressed this exception to allow inflation adjustments for the IRA catch-up limit as well, which means that the $1,000 catch-up contribution will be annually increased in $100 increments to match inflation.

Catch-up Contribution Change for High Earners in Employer Plans

Starting in 2024, catch up contributions will be handled differently for high-wage earners, who are defined as those making $145,000 or more with their employer in the prior year. This amount will be indexed to correspond to inflation. 

What this means for high earners:

For high-income earners in employer retirement plans such as 401(k) and 403(b), catch-up contributions will be required to be made to the Roth portion of their plan. In the past, catch-up contributions have always been made in tax-deferred dollars for all employees. 

The Roth IRA catch-up contribution rule is an attempt by the Secure 2.0 Act to increase tax revenues by ensuring contributions to Roth accounts are included in taxable income for the participant. It should be noted that not all employer plans allow Roth IRA contributions. 

New Option for Surviving Spouse Beneficiaries

Currently, the surviving spouse has many options when they are named as the beneficiary. The Secure 2.0 Act adds an interesting new option to allow the surviving spouse to elect to be treated as the deceased retirement account owner for distribution options. 

What this means for the spouse beneficiary:

This appears to allow the surviving spouse to delay distributions until the deceased participant/owner would have reached RMD age. This could enable strategic distributions during lower-income years and potentially save tax dollars. 

The Bottom Line

These are just a few of the changes we believe to be the most relevant to retirement savers, but the Secure 2.0 Act has many other provisions that will affect retirement savings and will be important to monitor closely.


Josh HahnJosh Hahn is a senior vice president and manager of trust administration at UMB Bank. He is responsible for providing leadership, supervision, coaching and long-term training for a team of trust professionals. He also provides leadership in connection with the fiduciary administration of all aspects of accounts, including probate estates, custody, agency, IRA and other assigned accounts. Hahn has been with UMB since 2000. 

Happy 401(k) Day!

In response to the 940,000 Colorado private-sector workers that lack access to an employer-sponsored retirement savings plan, the Colorado SecureSavings Program will allow those who need it the most to access this essential benefit.  A retirement savings benefit is proven to increase the likelihood that employees consider saving. Additionally, access to educational resources and employer support creates the opportunity for those that do not traditionally invest to understand the true value it could bring to securing their financial futures.

There is a retirement savings crisis on the horizon with many across the United States relying on an uncertain Social Security benefit. Now, more than ever, individuals must learn how to manage their own retirement savings. So, how does the state requirement support this effort and what are the viable alternatives?

What is the Colorado SecureSavings Program?

Unlike a defined benefit plan, the Colorado SecureSavings Program is a portable IRA that Colorado private-sector workers fund by payroll deductions through their employers. Because it is portable, the account follows the employee no matter how long they stay with their employer, which encourages continued retirement saving. Employers are required by law to enroll their employees, but employees may opt out of the Program or re-enroll at any time. When the Program launches in January 2023, employers must choose to participate in the Program or to obtain a qualified retirement plan for their employees.

If a business already offers a qualified retirement plan to some or all of its employees, it can certify its exemption through the Program’s online portal and is not required to participate. Participation in the Program requires the following three actions by Employers: register, upload employee roster, and remit employee payroll contributions. The lawmakers required that the Program design minimizes the time burden on employers; therefore, registration is expected to only take minutes by inputting a few data points. Depending on what type of payroll system a business uses, uploading the employee roster and remitting can be automated through the Program’s online portal and will likely only require 15 minutes per month.

Unlike a 401(k) plan, the participating employer is not a fiduciary in the SecureSavings Program. This means the employer does not bear responsibility for the administration, investment, or investment performance of those participating in the state program. Participating employers do not have any liability for an employee’s decision to participate in, or opt out of, the Colorado Secure Savings Program or for the investment decisions of the Board or of any enrollee.

How Does the State Requirement Differ from a 401(k)?

Both a 401(k) and the state program offer employees a means to a more financially secure future. However, there are a few advantages of a qualified alternative like a 401(k) that employers should consider as the deadline approaches. Employers have the choice to “match” a percentage of employee contributions to retirement savings in a 401(k). Matching employer contributions appeal to jobseekers and benefit employees because matching contributions grow the savings account quicker than one without an employer match.

Employers should also consider the cost of qualified plans, whether they are suitable for their employees, and the legal and administrative requirements for sponsoring a plan. The Colorado Secure Savings Program contribution limits align with federal standards for IRAs (which are considerably lower than 401(k) contribution limits), employers are prohibited from matching, and the Program is provided to employers at no cost. While this public option may appeal to some businesses, other plans may offer more robust benefits, opportunities for employer matching, small business tax credits, and more employer control over the investment lineup.

Next Steps for Colorado Employers

Colorado SecureSavings launches in 2023, so now is the time for business owners to explore all options in the private market and consult competent tax advice. Employers are encouraged to consider the full range of options before enrolling in a retirement program, whether that be the state program or a qualified alternative like a 401(k).

Shelton Capital Management is a Denver-based 401(k) provider working in conjunction with the Colorado Department of the Treasury’s Colorado Secure Savings Program to increase awareness of the importance of retirement savings. With the approaching state-requirement, it is essential that small business owners across Colorado are aware to avoid potential penalties for non-compliance and understand alternative options that may be more suited to their businesses’ needs.


Carrie Della Flora manages the Client Experience team and is responsible for providing authentic client service and support to Shelton Capital Management’s 3(38) Fiduciary clients. Della Flora joined Shelton in 2018 with 16 years of industry experience, having recently worked at Matrix Financial Solutions.



Can your company 401(k) plan withstand the heat?


As summer temperatures rise and competition in Colorado’s job market heats up, do you have what it takes to rise above the rest?

Are you sure your company’s benefits are valued by your employees and by prospective candidates who you want to join your organization?

A strong company 401(k) offering can help you recruit and retain employees.

As a business owner offering a retirement plan to employees, you are a fiduciary and that brings a responsibility to offer the best retirement savings vehicle for plan participants.

Part of your responsibility is to review your 401(k) plan on an annual basis to make sure that it continues to provide a solid retirement savings option for your employees.

Your responsibility as a plan sponsor is to evaluate several aspects of the 401(k) plan starting with the investments that are made available to the plan participants.

Fees and expenses

High fees and expenses can inhibit the progress for plan participants to accumulate enough money for retirement. Additionally, excessive fees and expenses are often a reason for participant lawsuits over the quality of a company’s 401(k) plan.

Where do these high fees and expenses hide? A review of your 401(k) plan might show that high fees arise from using mutual fund share classes with high expense ratios. Another source of high expenses can come from the fees charged by the 401(k) plan’s administrator.

While fees may be excessive by themselves, non-transparent revenue sharing arrangements can cause the amount charged against participant accounts to be higher than needed. Wherever the fees may be levied, it is ultimately the plan sponsor’s responsibility to monitor and control these costs.

Employee education and guidance

Retirement readiness among participants has become an important concern among many plan sponsors who want to help ensure that employees can retire on time and with a sufficient plan balance for their retirement needs.

Employee education and guidance helps promote retirement readiness.

Beyond simply helping employees prepare for retirement, employee education has been shown to enhance employee engagement, which can lead to increased levels of saving. It also helps employees allocate their investments in the plan in a way that best serves their retirement goals.

A key benefit of employee education can be a reduction in employee financial stress. This provides a benefit not only to the plan participant, but also to the company. Employees with lower levels of financial stress are often more productive.

If your plan provider does not offer employee education and guidance, or if their programs are inadequate, this may be a valid reason to consider switching 401(k) plan providers.

Other reasons

There are additional reasons plan sponsors might review their business 401(k) plan and consider changing plans, including:

  • Low levels of service for plan participants
  • Poor sponsor support with compliance issues including discrimination testing, overall compliance, and plan audits
  • Inadequate technology

Plan sponsors should review all aspects of their company’s 401(k) on a regular basis. Your plan’s advisor or consultant should be playing an integral role in this review process. Upgrading your plan can be a good thing for your company and your employees.

Important Information
Investors should consider a strategy’s investment objectives, risks, charges and expenses carefully before investing. INVESTMENTS ARE NOT FDIC INSURED OR BANK GUARANTEED AND MAY LOSE VALUE.

2 Ann Margaret W 300x300 Ann Margaret Williams is the Director of Retirement Plan Services at Shelton Capital Management. A successful business owner and a veteran of the asset management industry, Ann Margaret earned her Master’s Degree from the London School of Economics and Political Science, and a Bachelor of Science degree in Business Administration from Villanova University

In your 50s? It’s not too late to start saving for retirement

While it can seem daunting to start saving for retirement in your 50s, keep in mind, you are not alone. From paying for a child’s college tuition to taking time off work for health-related issues, there are a number of reasons why someone may not start planning for retirement until later in life.

Fifty-four percent of baby boomers have little to no savings according to the Insured Retirement Institute. If that sounds familiar, then you need to start shifting your mindset from wondering why you put off saving to thinking about what will make you the most successful in retirement. Luckily, there are multiple strategies you can employ to help get you started.

Your highest priority is to get out of debt. Entering retirement with significant debt may set you up for failure. Liquidating your debt, including your mortgage, and then remaining debt-free is one of the best moves you can make as you plan for retirement. The less debt you have, the less money you will need each month to cover your expenses.

You should also think about downsizing your home. You may still be living in the house where you raised your family. Is it too big? Does it cost too much to maintain? Are taxes too expensive? Can you live in your current home into your later retirement years? If you can, do you want to? Depending on your answers to these questions, you should consider selling and moving into a home that will allow you to still enjoy retirement but save some money as well.

Next, create a retirement budget by thinking critically about likely expenses. Don’t forget to factor in health care expenses, which may be vastly higher than you are currently experiencing. Think about what emergencies or life changes could derail your budget. Medical expenses, long-term care or the premature death of a spouse could all be potentially devastating financially. This budgeting exercise is not just about cutting expenses but also thinking realistically about your projected spending in retirement.

A common question people ask is, “how much will I need to fund my retirement?” First, ignore the “retirement calculators” on the internet. They are often not helpful and may discourage you from starting to save. Instead, think about saving in one of two ways. You can ask yourself how much you can save from your current budget and then estimate how much that money will grow over the next 15 to 20 years at a reasonable rate of return. This will give you an idea of what your financial footing will be when you start your retirement.

Next, determine how much you can spend. Estimates fall typically within the three percent to five percent range depending on how you are invested. The other way to think about it is to start by determining what you are likely to spend. After that, you can begin to calculate what you will need to save to maintain your standard of living.

Set some realistic financial goals and commit to regularly investing each month. Consistently putting money into your retirement account is a great habit. It is easier to accomplish financial goals by saving small amounts than by making a single contribution annually, and this strategy will also allow you to potentially capitalize on the ups-and-downs of the market.

Be sure to increase the amount you save each year and take advantage of your 401k if your employer offers one. After 50, you can contribute more to a 401k using the “catch up” contribution rule. The current maximum contribution is $26,000 per year. Even if you do not have access to a 401k, you can still open an IRA and “catch up” with a total annual contribution of $7,000.  

You will want to make sure you are investing wisely. Develop a reliable investment portfolio that fits with your tolerance for risk and allows you to stay invested when the market gets volatile. Now is not the time to take chances on crazy schemes or to move in-and-out of the market. Solid and reliable investments should be your guiding principles. Keep in mind there is no “magic number” you need to hit. Having some money generating additional income is better than having no money. If you are uneasy about whether you are setting realistic goals or have a strong portfolio established, call in a seasoned professional who can help you set up and monitor your investments.

It is also critical to maximize your social security or other benefits. Social security is an excellent source of income because there are cost-of-living adjustments throughout your life. You may need to work longer than planned, however, to ensure that you are fully leveraging the program. Your social security benefit is based on your best 35 years of income. Working just a little longer at a higher income tier may allow you to eliminate some of the lower-income years–increasing your overall benefit in the process.

If you have a pension, work long enough to maximize that as well. It may or may not have a cost of living adjustment, but any lifetime payment is advantageous to your long-term retirement goals. You may even want to consider working part time for a while after you retire to create a little bit more monthly income.

Ultimately, do not let the challenge of starting late on saving for retirement deter you. By setting realistic goals, concentrating on what you can control and practicing financial discipline, you can still build wealth and ensure a secure and sustainable retirement.

Building employees financial security in times of uncertainty

Today’s tumultuous environment has reinforced the need for financial approaches that can help weather an unexpected storm. As a business leader, times like this make it more important for you to help your employees set themselves up for success both in the current challenging situation as well as in the future, when conditions are more stabilized.

Helping your employees take a proactive, holistic approach toward financial wellness by examining healthcare savings, savings accounts and retirement funding can provide them a roadmap to make their hard-earned funds work for them in times of crisis and in the long term. Share these three best practices with your employees to help them feel more financially secure in both good and challenging scenarios.

Pay off and manage debt

If an individual has high-interest consumer debt, it’s best to pay off that debt first. While making additional payments on traditional loan debts, such as student loans or mortgages, will save money in the long run, it won’t lower monthly payments. By chipping away at high-interest debt, individuals can save money by cutting down on their interest payments.

In times of financial stress, such as the current pandemic, credit card companies may be willing to offer lower interest rates or delayed payments – so encourage your employees to pick up the phone and call their creditors to determine whether this is an option.

Build an emergency fund – especially for medical emergencies

Building an emergency fund for unexpected costs is important to overall financial wellness. In case of an unexpected events, individuals should have at least six months of income that can be lived on comfortably. This amount needs to account for everyday needs and expenses, such as monthly bills, including rent or mortgage payments.

Unfortunately, 44% of Americans don’t have enough cash to cover a $400 medical emergency according to a Federal Reserve report. The report also states that the median out-of-pocket cost for an unexpected medical expense is $1,000. This means half of our country is one unexpected medical bill away from a charge they can’t pay. Offering your employees an HSA-eligible health plan can help them better manage these expenditures. HSAs not only cover planned out-of-pocket costs but allow users to be better prepared financially when an unexpected injury or illness comes along.

In 2020, an individual can contribute a maximum of $3,350 to their HSA and a family can contribute a maximum of $7,100 with an additional $1,000 catch up contribution allowed for people 55 or older.

The triple tax advantage of an HSA

HSAs can make dollars go farther with the advantage of triple tax savings. HSAs offer tax benefits* at deposit, during the account’s life and upon withdrawal for qualified medical expenses. In addition, money contributed to an HSA can be rolled over from year-to-year — there is no “use it or lose it” clause.

HSA funds can be used for a variety of medical expenses, including dental, hospital and drug store expenses.

If and when you do offer an HSA-eligible health plan to your employees, make sure they understand the benefits. It could help be the difference between members of your team being able to cover an unexpected medial expense or being financially derailed by one.

Plan for the long term

Invest in an HSA

HSAs can also be used like traditional retirement accounts, allowing your employees to invest money in mutual funds, like a 401(k) or traditional IRA. Earnings in invested HSA funds grow tax-free, making your dollars stretch even further.

HSAs can serve as a powerful tool for long-term savings and as a key part of an overall financial wellness strategy to build wealth for both medical and other general expenses. A 2019 Employee Benefits Research Institute (EBRI) study estimates some couples could need as much as $363,000 to cover out-of-pocket medical expenses during retirement.

Increase 401(k) contribution

401(k) plans are a popular tool used to set aside money for retirement. They are traditionally tax free and have high annual contribution limits (an $19,500 maximum in 2020). This allows employees to set aside money that will earn interest and compound over the years until they can withdraw. Contributing from each paycheck can have a huge impact over many years — particularly if there is an employer match involved.

We’re all facing challenges during these uncertain and unprecedented days – but by educating your employees on ways to not only financially manage these current circumstances but also prepare for upcoming ones, you can make a positive difference.

*All mention of taxes is made in reference to federal tax law. States can choose to follow the federal tax-treatment guidelines for HSAs or establish their own, some states tax HSA contributions. Please check with each state’s tax laws to determine the tax treatment of HSA contributions or consult your tax adviser. Neither UMB Bank, nor its parent, subsidiaries or affiliates are engaged in rendering tax or legal advice. Withdrawals for non-qualified expenses are subject to income taxes and a possible additional 20% penalty if you’re under age 65. 

Accessing retirement accounts in a time of uncertainty

Americans entered the year with a great economy, low unemployment, and anticipation of continued economic success.  The unemployment rate reached lows not seen in decades and Americans were feeling confident. As Valentine’s Day approached, rumors of a virus in China started to hit mainstream media.  Shortly after, the market started to decline, and the first case of COVID-19 was confirmed in the United States.

As the Coronavirus spread, stay-at-home orders were put into place, the stock market crashed, and weekly unemployment claims spiked to record highs. With unemployment in double-digits, and layoffs surly to follow into the summer, Americans are scared.  For those unemployed, there are still obligations to pay.

As fear gripped Americans, Congress passed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).  This bill provided checks to Americans under certain income limits along with help to small business owners.  The CARES Act also altered the distributions rules to make it easier for people impacted by COVID-19 to access retirement accounts. In a time of uncertainty, knowledge will help guide important decisions of many Americans faced with tough decisions. As Plato said, “Human Behavior flows from three main sources: desire, emotion, and knowledge.”

Standard rules

Previously, investors taking money out of retirement accounts (401(k)s, IRAs, 403(b)s, ect.) prior to age 59 and a half would face ordinary income tax, along with a 10% tax penalty on the amount of withdrawal in the year of the distribution. Within an Individual Retirement Account (IRA), there were a few limited exceptions to the 10% tax penalty including first time home purchase, higher education expenses and disability — to name a few.  Most 401(k) accounts are only available for withdrawal after separation from service.  A loan may be available from a 401(k) account whether still employed or no longer working, up to $50,000 or 50% of the accumulation, whichever is less.

Eligibility for relaxed rules

Under the CARES Act, distribution rules were changed in favor of investors impacted by COVID-19 to make it easier to access retirement accounts with a lower tax burden.  To qualify for the relaxed rules, qualified participants must demonstrate they were diagnosed with coronavirus, had a spouse or dependent diagnosed, or experienced a layoff, furlough, reduction in hours, or were unable to work due to COVID-19, or experienced a lack of childcare because of the virus. Without a valid COVID-19 related reason, the standard rules will apply.

CARES Act relaxed distribution rules

Under the CARES Act, Americans who qualify can take up to $100,000 out of eligible retirement accounts in 2020 without paying a 10% early withdrawal penalty. The act also suspends a mandatory 20% withholding that usually applies to distributions from employer sponsored retirement accounts. Investors will still owe ordinary income on IRA distributions, but a great amount of flexibility is given to manage the tax liability.

Ordinary income taxes from the distribution can be spread over a three-year period or can be paid in 2020 if income will be lower due to a furlough or layoff.  The CARES Act also gives individuals to three years to pay the money back into a retirement account so the distribution would not be taxable compared to just 60 days under the standard rules.

The available loan amounts, if available, have doubled to $100,000 or up to 100% of the vested balance in 401(k)s.

Should I rollover my 401(k) to an IRA?

For employees that have been let go, a decision must be made to leave money in a previous employer’s 401(k) or complete a rollover to an IRA. A 401(k) may provide the advantage of a loan option not given by an IRA but rolling to an IRA has several advantages.

An IRA allows investors to choose where they would like to invest their retirement account.  This means investors can choose a low-cost investment company which often have lower fees or a professional asset manager. An IRA will typically provide investors with greater fund options with lesser transactional paperwork. Each investor is different and should consult professionals to help make this decision.

Knowledge in power

In the face of fear and uncertainty, crucial decisions must be made based on facts and changing rules.  The CARES Act relaxes the rules to help Americans who qualify use retirement accounts through the pandemic. With more options, smart decisions based on investment and tax law will save money and ease the anxiety of many Americans without employment.