The SECURE 2.0 Act of 2022 is a piece of legislation that passed at the end of last year and created new Roth options for business-sponsored retirement plans. There will be a new set of Roth features available for organizations that offer 401K, SEP IRA, or a simple IRA for their employees. Join us as we dive into the changes that you should know about, what additional Roth options you’re going to have available at your disposal in the future, when people can expect to have these new features available, and whether it makes sense for you to offer them to your employees or take advantage of them for yourself.

Show Notes
[05:50] A catch-up contribution – Grant starts the conversation by defining a catch-up contribution and the changes that might happen in 2025.

[10:40] The difference – Grant talks about the difference between a Safe Harbor 401(k) plan and a Safe Harbor non-elective Contribution.

[16:50] (SEP) IRA & Simple IRA – Grant explains how Simplified Employee Pension and SIMPLE IRA Plans work.

[23:12] Roth treatments – We discuss how Roth treatments can be a helpful tool for your employees that wasn’t available before.

[28:47] Opposites – Grant explains how Roth accounts are the exact opposite of deferred tax setups.

Resources
What You Need to Know About the SECURE Act 2.0
lordabbett.com/en-us/financial-advisor/insights/retirement-planning/what-you-need-to-know-about-the-secure-act-2-0.html

SECURE 2.0 Act of 2022
Title I – Expanding Coverage and Increasing Retirement Savings
finance.senate.gov/imo/media/doc/Secure%202.0_Section%20by%20Section%20Summary%2012-19-22%20FINAL.pdf

Your Complete Guide to the SECURE 2.0 Act of 2022
adp.com/spark/articles/2023/04/your-complete-guide-to-the-secure-20-act-of-2022.aspx…(read more)

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Roth Accounts & Your Retirement Plan: New Options for Business Owners – GMB Ep 206

As a business owner, planning for retirement is crucial to ensure a secure financial future. Traditional retirement accounts such as 401(k)s and IRAs have long been popular options for saving for retirement, but there is a new option that business owners may want to consider: Roth accounts.

Roth accounts, named after Senator William Roth who sponsored the legislation creating them, offer unique tax advantages that can be particularly beneficial for business owners. In a traditional retirement account, contributions are made with pre-tax dollars, meaning that the money is not taxed until it is withdrawn in retirement. With a Roth account, on the other hand, contributions are made with after-tax dollars, meaning that withdrawals in retirement are tax-free.

On a recent episode of the “Good Money Moves” podcast (Episode 206), certified financial planner Bruce Helmer and expert in finance Andy Brownell explored the benefits of Roth accounts for business owners. They highlighted the flexibility and tax advantages that these accounts offer, making them an attractive option for retirement planning.

One of the key advantages of Roth accounts for business owners is the ability to diversify their tax liabilities in retirement. For many business owners, the majority of their retirement savings may be in traditional retirement accounts, which means that all of their withdrawals in retirement will be taxed at their ordinary income tax rate. By adding a Roth account to their retirement portfolio, business owners can create tax-free income streams, reducing the impact of taxes on their retirement savings.

Furthermore, Roth accounts can be a valuable tool for succession planning and estate planning for business owners. By strategically converting traditional retirement accounts to Roth accounts, business owners can minimize the tax burden on their beneficiaries and leave a lasting legacy for their loved ones.

Additionally, business owners have the option to establish a Roth 401(k) or Roth IRA for their employees, providing a valuable benefit that can help attract and retain top talent. This can be a win-win for both the business owner and their employees, as it allows everyone to take advantage of the tax benefits of Roth accounts.

While Roth accounts offer many benefits for business owners, it’s important to carefully consider the implications of converting traditional retirement savings to Roth accounts. The decision should be based on individual circumstances, tax implications, and long-term retirement goals.

In conclusion, Roth accounts present new and exciting options for business owners to enhance their retirement planning. The tax advantages, flexibility, and potential for estate planning make Roth accounts a valuable addition to any business owner’s retirement portfolio. As with any financial decision, it’s important to consult with a qualified financial advisor to determine the best approach for incorporating Roth accounts into your retirement plan.