Tax Tips (and other stuff)

Kelly Bullis: SECURE 2.0 Act Provisions For 2024

Kelly Bullis

Kelly Bullis

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The SECURE 2.0 law was enacted in late 2022. Many of its provisions are just now being activated in 2024. Here are some other provisions that start in 2024.

Roll over unused 529 plans to Roth IRA. 529 plans are a great way to set aside funds for kid’s education. They grow tax free. The general plan is to put as much away early in a child’s life in order to give it time to grow before they start into college. If there are multiple children involved, the old rule was you could roll over unused 529 funds into a younger sibling account when the older is done, but you had to empty out the account when the youngest child graduates. The new rule allows you to roll over unused 529 funds into a Roth IRA (subject to normal contribution rules each year) as long as the 529 plan had been in existence for at least 15 years. There is a lifetime cap of $35,000 on 529 plan rollovers into a Roth.

A new IRA early withdrawal exception to the early withdrawal penalty. A participant can take an early withdrawal by self-certifying that they’ve been a victim of domestic abuse. There is a maximum penalty free withdrawal under this exception. The lesser of $10,000 (indexed for inflation) or 50% of the account balance. Why or why doesn’t Congress index the threshold for taxing Social Security?

Another IRA or 401(k) early withdrawal exception. The new one added is for “unforeseeable or immediate financial needs relating to personal or family emergency expenses.” The amount allowed to be withdrawn is limited to $1,000 and you can recontribute that amount within three years without triggering other IRA or 401(k) contribution limitations.

IRA catchup amount of $1,000 if you are 50 or older is now indexed for inflation. Why or why won’t Congress index the threshold for taxing Social Security to inflation?

You can postpone 401(k) withdrawals. Prior to the SECURE 2.0 act, you had to start taking Required Minimum Distributions from a 401(k) just like an IRA. Now that requirement is eliminated for 401(k)s. A new reason to have a 401(k) account for your business instead of various IRA variations (SIMPLE IRA or SEP-IRA.)

Another nice “new” provision that kicks in is setup up a “rainy day” account. Your company is able to provide emergency savings accounts (ESAs) that participants can tap to pay for emergencies. These accounts are funded with contributions from Roth 401(k) accounts. Such accounts do not provide a tax deduction for contributions but do accumulate tax-free earnings on a tax-deferred basis. There is a maximum amount of contributions to such ESAs. $2,500 which is indexed to inflation. Why or why won’t Congress index the threshold for taxing Social Security?

If you haven’t picked up on my frustration with the evil current situation causing many elderly folks have to pay tax on their Social Security benefits when they are barely getting by. The current non-inflation indexed threshold has caused a flip of originally only about 10% of Social Security beneficiaries being taxed to over 80%. HORRIBLE!

Have you heard? Job 6:8 says, “Oh that I might have my request, that God would grant the thing that I long for.”

Kelly Bullis is a Certified Public Accountant in Carson City. Contact him at 775-882-4459. On the web at Also on Facebook.


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