Secure Act 2.0 Part 2
Who’s hungry for more Secure Act 2.0 updates (ha!)? If you missed our first update, feel free to review the Insights section of our website here. Part 2 of our series on the new legislation covers the many changes to Roth Accounts.
Section 601 of the new act allows for the creation of SIMPLE Roth Accounts and SEP Roth IRAs. Our guess is many will be unable to set up these in 2023. Custodians will need time to figure out the ins-and-outs of offering these accounts. Although we’ve not received word on income limits for these accounts, currently, we assume no limits just as there are no income limits on Roth 401(k)s (unlike Traditional Roth IRAs).
Under section 604, employers will be allowed to contribute matching funds to Roth Accounts within their qualified plans (e.g. 401k). Employers are also permitted to deposit non-elective contributions to the Roth if elected by the employee.
Note, all contributions to Roth accounts, whether SIMPLE, SEP, Qualified Plan Match/Non-Elective, will be included in the income of the employee the year the contribution is made.
More to come on Secure Act 2.0 next week!
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