Public Lesson

Lesson 3

What Retirees Need to Know About the Secure Act 2.0

4 min read

Last Updated: December 23, 2024

Now that we’ve seen how pre-retirees can benefit from increased retirement savings and access to their accounts, let’s take a look at how Secure Act 2.0 helps those already in retirement.

Secure 2.0 makes it easier for retirees to grow and keep more of the money they’ve earned from retirement accounts. In this lesson, we’ll take a look at the provisions that help retirees the most.

Delay Required Minimum Distributions (RMDs)¹

Learn more about RMDs in our dedicated lesson “Required Minimum Distributions.”

The original Secure Act increased the age at which workers must start taking withdrawals from their retirement accounts from 70½ to 72.

The Secure Act 2.0 increases it again: first to 73 starting Jan 1, 2023, and 75 by 2033. The extra three years primarily offers retirees who don’t rely on RMDs for income more time to avoid tax liabilities and grow potential returns pre-tax.

This rule change only applies to those who will turn 73 December 31, 2022.

IRS Waiving 2025 RMDs for IRA Beneficiaries²

For the 5th year in a row, the IRS is waiving RMDs in 2024 for IRA beneficiaries who are subject to the 10-year rule. The rule, introduced in the Secure Act, requires beneficiaries of inherited IRAs to withdraw the entire balance of the inherited account within 10 years after the death of the original account holder.

This is primarily important for non-spouse beneficiaries. Spouses can be considered an “eligible beneficiary,” meaning spouses can designate themselves as an account owner, which would exempt them from the 10-year rule. Learn more in our lesson

“Retirement Accounts and RMDs.”

Cut RMD Penalty in half³

Currently, the penalty for missing a required minimum distribution (RMD) is 50% of the amount you should have withdrawn. Secure Act 2.0 cuts this in half, to 25%, which started in 2023. On top of that, you could potentially see that penalty reduced to 10% of what you should have withdrawn if you correct the issue within a two-year period.

Even though this reduction can provide peace of mind in the event of a mistake, it’s still best to meet RMD requirements and avoid penalties.

Increase the qualified charitable distribution limit³

Qualified charitable distributions (QCDs), allow taxpayers over age 70½ to contribute to charity from their IRAs and avoid the recognition of income on the donated amount. This can be useful as a way to offset RMDs as well.

You can donate up to $108,000 in 2025. The limit for qualified charitable distributions will be indexed to inflation. This allows the limit to increase for QCDs without Congress having to change the law again.

Secure 2.0 also permits one-time gifts of $54,000 in 2025 through a charitable trust or gift annuity.

Retirement Savings “Lost and Found”

Currently, identifying “lost” retirement accounts can be difficult. This is especially true if a company went out of business after you left and your retirement savings from that company are being held with a new custodian.

The Secure 2.0 Act of 2022 enables the creation of a searchable database to help people find retirement benefits they lost track of. The retirement savings “lost and found” will be housed at the Department of Labor and will be created within two years of the bill’s enactment.

After the database goes into effect, you should be able to search it and see if you have retirement benefits you lost track of or maybe didn’t even realize you had. This can help to boost your assets and income in retirement.