SECURE Act 2.0: Expanded Roth Contributions

In today’s vlog, I will be discussing the SECURE Act 2.0: Expanded Roth Contributions. This is our third vlog about the changes within the SECURE Act 2.0 which became a law in December 2022. If you are curious about the changes regarding Required Minimum Distribution (RMD) and 529 plan rollover to Roth IRA you can check them out on our website. For this vlog, I will focus on the change of “Expanded Roth Contributions”.
Before this SECURE Act 2.0 is passed, you did not have an option of putting employer matching contributions or non-elective contributions to Roth. All of it are required to put in Traditional which means it is a pre-tax contribution. Also, for those who have SIMPLE IRA and/or SEP IRA, they are not allowed to do Roth contributions.
After the SECURE Act 2.0 is passed, employers are now permitted to offer this option to their employees. It would allow employees to put the employer matching contributions and nonelective contributions into Roth instead of Traditional. Please note that employer contributions to Roth will be included in the employee’s gross income for the year. Also, for those who have SIMPLE IRA and/or SEP IRA, they are now allowed to do Roth contributions.
However, it is completely up to employers and administrators to decide if they want to add this feature because they are not required to do it. If they do, it will take some time for employers and administrators to adjust and offer this feature. They would need to set up a process to handle employees’ elections and reporting any Roth contributions as taxable income. They would notify their employees when this option is available.
If your employer decides to offer this option to their employees, you would have to consider different factors such as taxable income and tax rates before making your decision on whether to take advantage of this option. The choice of contributing to Traditional or Roth will impact your retirement planning a lot. If this change could impact your situation, you can contact our advisors to discuss how to utilize this option as part of your retirement planning.

Adrianna Environmental B&W

Adrianna Rocha

Client Relations Representative

240-379-6929 V
240-439-6889 VP
512-379-6909 FAX

Adrianna Rocha joined Kramer Wealth Managers in 2021.

Adrianna is responsible for client experiences and service. As part of the customer service team, she strives to help and provide top-notch service to our clients. As part of her role, she communicates with clients through videophone, schedules client meetings, prepares and processes forms, and gathers information for our advisors.

Adrianna Rocha graduated with a Bachelor of Arts in Communication Studies from Gallaudet University in 2017. Before she joined our team, she worked in the customer service industry for nearly a decade. She excels in human-to-human relations and takes pride in not only her own accomplishments, but her clients’ as well. Adrianna enjoys chatting about her slight obsession with dogs, houseplants, essential oils, and food: especially Mexican food! She is also a proud fur-mama to her beautiful Aussie-mixed pup, Ziva.

Adrianna is not registered with Osaic Wealth.