How Secure Act 2.0 Changes Could Impact Your RMDs, Roths & Retirement Plan
Congress keeps rewriting the rules for retirement — and Secure Act 2.0 is the latest example.
While headlines focus on a few soundbites (“RMD age pushed back!”), the reality is more nuanced. There are dozens of small changes that, together, can affect when you must take money out, how much tax you pay, and what ultimately reaches your spouse and children.
In this client session, Christian Cordoba, CFP®, founder of California Retirement Advisors and member of Ed Slott’s Elite IRA Advisor Group℠ since 2007, walks through what Secure Act 2.0 really means for retirees and pre-retirees — especially those with meaningful IRA and 401(k) balances.
You’ll discover:
- How the new RMD ages (73 and 75) actually work — and who they apply to
- What changed in the RMD tables, and why your required withdrawals may be smaller (for now)
- Why the missed RMD penalty was reduced — and why that may mean more enforcement
- How Secure Act 2.0 treats Roth 401(k)s vs. Roth IRAs
- New exceptions to the 10% early withdrawal penalty (and who they help)
- How QCDs, QLACs, 529 plans, SEPs, and SIMPLE IRAs fit into modern retirement planning
- The new beneficiary categories and why your IRA beneficiary forms matter more than ever
Click the video below to watch:
What You’ll Learn (Without the Jargon)
This session is less about memorizing rule numbers and more about understanding how these changes could impact your retirement income, tax bill, and legacy.
Here’s a plain-English summary of the key ideas covered.
1. Why It’s Never Just About Investments
Christian starts by reminding clients that there’s more to the health of your retirement wealth than market performance.
Even a well-diversified portfolio can disappoint if:
- RMDs are mismanaged
- Tax law changes aren’t considered
- Beneficiary forms don’t match your estate plan
- New rules (like Secure Act 2.0) are ignored
The theme:
You can’t control markets, inflation, or headlines — but you can control planning decisions around taxes, RMDs, and how your accounts are structured.
2. New RMD Ages: 73 and 75
Secure Act 2.0 changes when many retirees must start taking required minimum distributions:
- The old “70½” starting age moved to 72 under Secure Act 1.0
- Now, Secure Act 2.0 pushes it to 73, and eventually 75 for younger birth years
Key takeaways:
- If you hadn’t started RMDs yet, your first required year may now be later than you expected.
- No one has to start new RMDs in the “gap year” created by the rule change — those first RMDs are essentially postponed.
- A later RMD age gives you extra planning runway – but it can also mean bigger RMDs later if balances grow.
This creates a choice:
Do you simply enjoy the delay, or do you use those extra years proactively (e.g., Roth conversions, QCDs, bracket management)?
3. Updated RMD Tables and Percentages
Christian walks through the updated Uniform Lifetime Table, which determines what percentage of your IRA or 401(k) balance must be withdrawn each year.
Examples:
- Around your early 70s, your RMD percentage is roughly 3–4% of your prior year-end balance
- As you age, that percentage gradually rises
Why this matters:
- Your RMD is based on December 31st values, even if markets fall afterward
- If your investments are all in growth stocks, a bad year after that snapshot can force you to sell at low prices to satisfy RMDs
- Designing your portfolio with dividends, interest, and “Bucket Plan” structure can make RMDs less disruptive
Christian also highlights the Single Life Expectancy Table, which applies to inherited IRAs (non-spouse). Those RMDs often require a much higher percentage to be withdrawn each year.
4. Missed RMD Penalty: Less Painful, More Likely Enforced
Historically, the penalty for a missed or underpaid RMD was 50% of the amount that should have been taken — one of the harshest in the tax code.
Secure Act 2.0:
- Reduces the penalty to 25%, and potentially 10% with timely correction and proper filing
Christian’s insight:
When the government “gives a deal,” it often means they plan to enforce the rule more consistently.
So while the penalty is lower, it becomes even more important to:
- Calculate RMDs correctly
- Avoid aggregating the wrong accounts (e.g., you cannot aggregate 401(k) RMDs with IRA RMDs)
- Fix any mistakes quickly with the proper forms
5. Roth 401(k)s Now Get Roth IRA-Like Treatment
A quirky rule is finally gone:
- In the past, Roth IRAs had no lifetime RMDs,
- But Roth 401(k)s did require RMDs once you reached the starting age.
Under Secure Act 2.0:
- Roth 401(k)s no longer have lifetime RMDs
That means:
- More reasons to consider Roth contributions inside employer plans
- More flexibility for retirees who prefer to keep money in a plan rather than roll everything to an IRA
6. New Exceptions to the 10% Early Withdrawal Penalty
Secure Act 2.0 adds several situations where you can access retirement funds before 59½ without the 10% “too soon” penalty (taxes may still apply).
Examples Christian highlights:
Terminal illness: broader, more generous access to funds
Certain emergencies, disasters, and domestic abuse situations
Expanded relief for public safety employees and some private-sector equivalents with long service histories
You may never personally need these rules — but knowing they exist can help you guide family members or loved ones in tough circumstances.
7. Planning Opportunities: 529-to-Roth, SEP/SIMPLE Roth & Student Loan Matches
Secure Act 2.0 creates more ways to get dollars into Roth accounts over time:
- 529 → Roth IRA: Subject to specific conditions and limits, unused 529 plan money may be rolled into a Roth IRA for the beneficiary over time, up to a lifetime cap.
- Roth SEP & Roth SIMPLE IRAs: Business owners and self-employed individuals now have additional Roth options within their small business retirement plans.
- Student loan matches: Some employer plans will be allowed to treat student loan payments as if they were plan contributions, and provide matching contributions inside the plan.
Most of these won’t drive your day-to-day retirement, but they are powerful tools for children, grandchildren, and younger professionals you may be helping.
8. QCDs (Qualified Charitable Distributions) Still Start at 70½
One important nuance:
- The RMD age moved later (73/75),
- But QCD eligibility did not move.
You can still make QCDs:
- Starting at age 70½, directly from your IRA to a qualified charity
- Up to annual limits (now indexed for inflation)
Why this matters:
- QCDs don’t show up as taxable income, which can help reduce:
- Tax brackets
- IRMAA (Medicare) surcharges
- Taxation of Social Security
- For charitably inclined retirees who don’t need all of their RMDs, QCDs remain one of the most elegant tools in the code.
9. Beneficiaries, “Stretch” Rules, and Why Forms Matter So Much
Christian spends time on a crucial but often overlooked topic: beneficiary designations.
Key points:
- Your IRA/401(k) beneficiary form overrides your will and living trust for those accounts.
- You must understand the three broad beneficiary types:
- Non-designated beneficiaries (NDBs): estates, charities, certain trusts
- Non-eligible designated beneficiaries (NEDBs): most adult children, many other individuals
- Eligible designated beneficiaries (EDBs): spouses, minor children of the owner (to 21), disabled/chronically ill individuals, and certain others with close age proximity
Why it matters:
- EDBs may still be able to “stretch” distributions over life expectancy.
- Most other beneficiaries are now governed by the 10-year rule, meaning all funds must be out of the account by the end of the 10th year after death.
- If a non-designated beneficiary (like a charity or estate) is mixed into the same account, it can shorten payout periods for everyone.
The solution: Coordinate beneficiary forms, trusts, and account titling so your intentions and the tax rules work together — not against each other.
10. QLACs: One Way to Reduce Future RMDs and Create Longevity Income
Finally, Christian introduces Qualified Longevity Annuity Contracts (QLACs):
- A QLAC lets you use a portion of your IRA (now up to $200,000) to purchase a deferred income stream that begins at a later age.
- Money allocated to a QLAC is excluded from RMD calculations until payments begin.
Potential benefits:
- Can reduce the size of RMDs on the rest of your IRA
- Creates a guaranteed income stream later in life, which may help with longevity concerns
- May help align income with later-life expenses
They’re not right for everyone, but for some retirees with large IRAs and strong health/longevity, they can be one more tool in the planning toolkit.
Why These Changes Matter Even More in California
Secure Act 2.0 may be federal law, but its impact is amplified in California, where:
- State income taxes are high
- Retirement balances tend to be larger
- Life expectancy can be longer
- Healthcare and long-term costs are significant
That means:
- Bigger IRAs + later RMDs can set up a future “tax spike” if nothing is done
- Misaligned beneficiaries can cause heirs to face compressed tax windows
- Missed opportunities (QCDs, Roth conversions, QLACs, etc.) can quietly cost tens or hundreds of thousands over a lifetime
These rule changes are not just technical footnotes — they’re levers that can either protect or erode your retirement assets and your family’s inheritance.
Simple Next Steps
Here are a few practical actions to consider after watching:
- Confirm your RMD start age under the new rules
- Review beneficiary forms on every IRA, 401(k), 403(b), and similar account
- Map your tax brackets for the next 5–10 years — especially your “runway years” before RMDs
- Consider whether QCDs, Roth conversions, or QLACs might fit your goals
- Talk with a coordinated team (advisor, tax professional, and estate attorney) before making major changes
Want Help Navigating Secure Act 2.0 for Your Situation?
If you’d like a clearer understanding of how these rule changes affect your retirement plan, you can schedule a complimentary 20-minute Q&A call with one of our licensed advisors.
During this call, we can:
- Clarify your likely RMD timeline under the new rules
- Identify where future tax pressure may build up in your plan
- Discuss options for reducing lifetime taxes and simplifying distributions
- Help you ask better questions of your CPA and estate attorney
If you’re ready to bring clarity and coordination to your retirement accounts, you can schedule your complimentary 20-minute Q&A below.
Best Regards,
California Retirement Advisors