Significant Retirement and Tax Changes in the SECURE 2.0 Act of 2022

August 16, 2023 · 8 min read

By: Chris Wehner, CPA, CFP – Gross, Mendelsohn & Associates

The SECURE 2.0 Act of 2022 (“Secure 2.0”) was passed on December 29, 2022, and focuses primarily on enhancing retirement plan incentives for individual taxpayers.

Let’s review some key provisions of the bill and how they could impact you and your business.

Automatic Enrollment in Employer Retirement Plans

Human psychology is fascinating, and the Secure 2.0 Act of 2022 plays into that by automatically enrolling employees in their employers’ retirement plan whenever the employee is first eligible to participate. This is not a new concept, but it hasn’t been legislatively mandated before now.

Employees may opt out of participation, but studies show that more employees participate (fewer opt-out) when automatically enrolled than when employees need to opt-in to participate.

The default election term is that certain employers will withhold a minimum of 3% and a maximum of 10% of an employee’s compensation and contribute that to the plan. This withholding percentage will increase by 1% annually until it reaches a minimum of 10% and a maximum of 15%. All current 401(k) and 403(b) plans are grandfathered.

The following employers are not subject to this automatic enrollment provision:

Employers with fewer than 10 employees
Businesses that have not been in business for more than three years
Churches
Governments

This provision is effective for plan years beginning after December 31, 2024.

Retirement Savers Match

A nonrefundable credit is currently available for certain individuals who contribute to an IRA, employer plan, or ABLE account. This credit is repealed and replaced with a federal matching contribution that must be deposited into a taxpayer’s IRA or retirement plan. The match is equal to 50% of the individual’s contribution up to $2,000 per individual. The amount phases-out for taxpayers who file a joint return and have income between $41,000 and $71,000 ($20,500 and $35,500 for taxpayers who file single or married filing separate; $30,750 and $53,250 for head of household filers).

The Treasury Department will be advertising these changes in a marketing campaign to increase public awareness of this benefit.

This provision is effective for taxable years beginning after December 31, 2026.

Required Minimum Distribution Age Change

Secure 2.0 increases the maximum age for individuals to begin withdrawing retirement plan funds to 73 beginning on January 1, 2023 and increases it again on January 1, 2033 to 75. Previously, the SECURE Act of 2019 increased the age from 70 ½ to 72.

Retirement Plan Catch-Up Limits

For 2023, individuals 50 or older may contribute an additional $1,000 to their IRA accounts; the maximum allowed is $6,500 for those under 50. Individuals over 50 may also contribute an extra $7,500 to employer retirement plans for 2023; the maximum allowed is $22,500 for those under 50. Secure 2.0 indexes this catch-up contribution to inflation.

This indexing of the catch-up contribution amounts is effective for taxable years beginning after December 31, 2023.

Certain older employees who participate in their employer’s retirement plan are also allowed to make catch-up contributions. Secure 2.0 increases these catch-up contributions to the greater of 1) $10,000 or 2) 50% more than the regular catch-up amount in 2025 for individuals who have attained ages 60, 61, 62 and 63. The increased amounts are indexed for inflation after 2025.

These retirement plan catch-up contribution amounts are effective for taxable years beginning after December 31, 2024.

Student Loan Assistance

Student loan debt is hitting younger employees hard, hard enough that many aren’t saving for retirement and devoting whatever they can to paying down that debt. Secure 2.0 allows employers to make matching contributions to retirement plans with respect to qualified student loan payments. A qualified student loan payment is any debt incurred by the employee solely to pay qualified higher education expenses of the employee.

This section is effective for contributions made for plan years beginning after December 31, 2023.

Military Spouses Retirement Plan Eligibility

Many times, spouses of members of the military aren’t able to satisfy the minimum eligibility requirements required to become participants in employer plans or vest in employer contributions. Secure 2.0 provides small employers with a tax credit with respect to defined contribution plans if they satisfy all of the following requirements:

Make military spouses eligible for plan participation within two months of their hire date,
Make the military spouse eligible for any matching or non-elective contributions they would have been eligible for had they satisfied the vesting requirements of having two years of service and
Make the military spouse 100% immediately vested in all employer contributions.

The credit is equal to the sum of $200 per military spouse and 100% of employer contributions up to $300 for a maximum credit of $500. The credit applies for three years with respect to each military spouse that is also not classified as a highly compensated employee.

This section is effective for plan years beginning after December 29, 2022.

Retirement Plan Participation Incentives

Many employer-sponsored retirement plans are subject to nondiscrimination testing which, if employee participation is low, can affect how much other employees may contribute to the plan. Employers are now allowed to provide de minimis financial incentives to employees for participating in employer-sponsored retirement plans. These incentives must be paid with non-plan funds.

This section is effective after December 29, 2022.

Early Distribution Penalty Waiver

Normally, if an individual withdraws funds from a qualified plan or IRA and they are younger than 59 1/2, the IRS would assess a 10% penalty on the amount of that distribution unless it was for certain qualified transactions like a first-time home purchase or medical expenses. Secure 2.0 allows an exception for certain distributions used for emergency expenses, which are unforeseeable or immediate financial need relating to personal or family emergency expenses and have the following terms:

The early distribution may be taken only once per year,
The distribution can be no more than $1,000 and
The taxpayer may repay the distribution within three years.

If a taxpayer chooses to repay the distribution, no other distributions for emergency expenses may be taken during the repayment period unless full repayment has occurred.

This section is effective for distributions made after December 31, 2023.

Automatic Portability of Participant Accounts

Many participants of employer-sponsored retirement plans who have terminated employment with the sponsor leave their accounts with their former employer’s plan without rolling over the funds. Employers have had the option, depending on the balance in the plan, to either distribute those funds to participants immediately or roll the balance out of the plan and into an IRA for the participant after the participant’s termination of employment. Third-party administrators may now offer these services to automatically transfer accounts that satisfy the account balance requirements.

This section is effective for transactions on or after December 29, 2023.

Starter 401(k) Plan

Secure 2.0 allows employers that do not sponsor a retirement plan to create a plan that would generally require that all employees be automatically enrolled and contribute at a rate of between 3-15% of compensation.

This section is effective for plan years beginning after December 31, 2023.

Qualified Distribution of 529 Funds to Roth IRAs

Parents and caregivers of children may face uncertainty about whether to contribute to a 529 plan because, previously, those funds could only be used to fund qualified educational expenses. Secure 2.0 now allows beneficiaries of 529 college savings accounts to roll over a maximum of $35,000 over their lifetime from their 529 account to a Roth IRA.

These rollovers would be subject to Roth IRA annual contribution limits and the 529 account must have been open for more than 15 years. This provision may eliminate some of the hesitancy surrounding contributing to an account that may ultimately never be utilized if the child doesn’t go to college or have other qualified educational expenses or if the child secures scholarships that substantially pay for their higher education.

This section is effective with respect to distributions after December 31, 2023.

Resolution to Erroneous Excess Distributions from Retirement Plans

Many individuals receive more than they anticipated from a qualified plan like a 401(k) or IRA. The process for correcting these mistakes can be cumbersome and fiduciaries may require the individual to repay the plan for the excess amounts distributed, which could be a substantial amount if the error isn’t caught for several years.

Secure 2.0 allows plan fiduciaries to decide whether to recoup overpayments made to retirees. If plan fiduciaries decide to recoup overpayments, limitations and protections apply to protect innocent retirees.

This section is effective after December 29, 2022.

Penalty on Shortfall in Required Minimum Distributions

The penalty for failing to take the required minimum distribution amount from retirement plans has been reduced from 50% of the shortfall to 25%. If the failure is corrected timely, the penalty is reduced to 10%.

This section is effective for taxable years beginning after December 29, 2022.

There are a number of other provisions in the bill that are not summarized above, but most are aimed at making saving for retirement and withdrawing from tax-favored plans easier for individuals and participants.

Need Help?

Chris Wehner, CPA, CFP, of Gross Mendelsohn & Associates helps families and businesses develop and execute tax strategies that help them meet their financial goals.

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Thinking about a life estate in Maryland? Learn the benefits, risks, Medicaid concerns, and alternatives before adding children to your deed.

Jan 19, 2026 in Blog

Life Estates in Maryland: When They Make Sense and When They Don’t

A life estate can be a useful planning tool for some Maryland families who want to protect a home, avoid probate, and plan ahead for the future. At the same time, life estates create permanent legal and financial consequences that are often misunderstood. Knowing when a life estate works well and when it creates long-term problems is essential before moving forward. This article explains how life estates function in Maryland, common risks families encounter, how life estates interact with Medicaid planning, and alternatives that may offer greater flexibility. What Is a Life Estate? A life estate allows more than one person to hold ownership interests in the same property at different times. In Maryland, this typically allows a parent to live in and control a home for life while naming children or other individuals to receive the property automatically after death. The person living in the home is called the life tenant. The individuals who will receive the property later are known as remaindermen. While remaindermen cannot take possession during the life tenant’s lifetime, they hold a present ownership interest in the property. Life estate deeds are often used to avoid probate, support long-term planning goals, and simplify the transfer of a home. These benefits must be balanced against the legal limitations created by the deed. When a Life Estate May Make Sense In limited situations, a life estate can serve a practical purpose. This is most common in straightforward family arrangements where a parent intends to remain in the home for life and wants the property to pass directly to a specific individual without probate. Life estates may also be considered when flexibility is not a priority and future long-term care needs are unlikely. Even in these situations, careful legal review is critical before creating the deed. When Life Estates Create Problems for Maryland Families Limits on Selling or Refinancing Once a life estate is created, the life tenant generally cannot sell or refinance the property without the consent of all remaindermen. This can create serious challenges if care needs change or the property must be sold to cover expenses. Some families explore tools such as a testamentary power of appointment or a nominee realty trust to increase flexibility, but these options require careful planning and are not appropriate in every case. Difficulty Changing Ownership Removing a remainderman from a life estate deed is far more complex than changing a beneficiary on a financial account. Once added, that ownership interest is legally significant and often cannot be undone without consent or legal action. Exposure to Remainderman Issues After a remainderman is added to the deed, their legal and financial issues may affect the property. Court judgments, tax liens, divorce proceedings, or bankruptcy can complicate ownership and create unexpected risks. If a remainderman passes away before the life tenant, their interest may pass through their estate, potentially requiring probate and introducing new parties into the ownership structure. Medicaid Look-Back Concerns Creating a life estate involves transferring a property interest. If long-term care is needed within five years of that transfer, Maryland Medicaid rules may impose a penalty period. Timing and structure matter, and mistakes can be costly. Nursing Home Recovery Risks If the home is sold while the life tenant is receiving nursing home care, the state may assert a claim against the proceeds to recover Medicaid benefits paid. This outcome often surprises families. Life Estates and Medicaid Planning in Maryland A common misconception is that a life estate automatically protects a home from Medicaid. While a life estate may avoid probate, it does not replace a comprehensive Medicaid planning strategy. Medicaid planning is highly timing-sensitive and should be coordinated with broader elder law goals. Families often benefit from reviewing life estates alongside other options discussed in our Maryland elder law resources. Alternatives That Offer Greater Flexibility Depending on family goals, other planning tools may provide better long-term outcomes. Revocable trusts, irrevocable trusts, and coordinated elder law planning strategies often allow for asset protection while preserving flexibility and control. These approaches may integrate more smoothly with Medicaid planning and incapacity planning and can reduce risk as circumstances change. Reviewing a Life Estate as Part of a Larger Plan Life estates affect more than property ownership. They influence taxes, Medicaid eligibility, and the ability to respond to future care needs. For this reason, they should always be evaluated as part of a broader estate and elder law plan rather than used in isolation. If you are considering a life estate or already have one in place, guidance from a Maryland elder law attorney can help clarify risks and identify options before a crisis occurs. To schedule a confidential consultation, contact us online, call our Columbia office at 443-339-5638, or reach our Rockville office at 240-456-1657.

Jan 13, 2026 in Blog

Life Estates in Maryland: Benefits, Risks, and Better Planning Options

A life estate can be a helpful tool for Maryland families looking to protect their homes, avoid probate, and plan for Medicaid. It is important to understand the risks involved. This article explains common life estate issues and why careful legal planning matters before deciding if this approach fits your situation. What Is a Life Estate? A life estate allows multiple people to hold interests in the same property at different times. In Maryland, this often means a parent keeps possession and use of their home while ensuring it passes to their children without going through probate. By creating a life estate deed, families may avoid probate, reduce Medicaid exposure, and receive a step up in tax basis. The person living in the home is known as the life tenant and retains control during their lifetime. The individuals who inherit the property are the remaindermen. Although they cannot take possession until the life tenant passes away, they hold a current ownership interest. When a Life Estate May Still Be Appropriate In limited situations, a life estate can serve a practical purpose. Some families use a life estate when a parent wants to remain in the home for life and ensure the property passes directly to a specific individual without probate. This is most common in straightforward family situations where long term care needs are unlikely and flexibility is not a primary concern. Even in these cases, careful review is important. A life estate permanently alters property rights, and future changes often require agreement from all parties involved. Five Issues Maryland Families Should Know 1. Limits on Selling or Borrowing Against the Property A life tenant generally cannot sell or refinance the property without agreement from all remaindermen. A testamentary power of appointment may allow the life tenant to change who inherits the property through a will, providing additional flexibility. A nominee realty trust may allow one or more children to act as trustee for all remaindermen, with decisions made by majority vote. This can be helpful when family members disagree. 2. Difficulty Removing a Remainderman Removing a remainderman from a deed is far more complex than changing a beneficiary on a financial account. In many cases, removal is not possible without consent or court involvement. 3. Legal Issues Affecting the Property Once a remainderman is added to the deed, their financial or legal issues may affect the property. Court judgments or tax liens may attach to the home Divorce or bankruptcy can complicate ownership If a remainderman passes away before the life tenant, their estate may require probate These issues may not force the life tenant to leave the home, but they can create significant complications. 4. Medicaid Look Back Period Transferring a property interest through a life estate can affect Medicaid eligibility if long term care is needed within five years of the transfer. 5. Nursing Home Reimbursement If the property is sold while the life tenant is in a nursing home, the state may have a claim against the sale proceeds to recover care costs. Why Life Estates Often Create Long Term Challenges Many families create life estates without fully understanding the limitations involved. Selling or refinancing the property usually requires consent from the remainder beneficiary, which can become problematic if care needs change or funds are needed. Life estates also expose the property to risks tied to the remainder beneficiary. Financial hardship, divorce, or creditor claims affecting that individual can impact the property even while the life tenant continues to live there. Life Estates and Medicaid Planning in Maryland A common misconception is that a life estate automatically protects a home from Medicaid rules. While a life estate may avoid probate, it does not automatically shield the property from Medicaid eligibility requirements or recovery claims. In some situations, transferring a remainder interest can create a Medicaid penalty period if it is not structured properly or completed at the right time. Because Medicaid planning is highly timing sensitive, a life estate should never be used as a substitute for a comprehensive elder law strategy. Alternatives That Offer More Flexibility Than a Life Estate Depending on a family’s goals, other planning tools may provide better long term results. Revocable trusts, irrevocable trusts, and coordinated elder law planning strategies may offer asset protection while preserving control and adaptability. These options often integrate more effectively with Medicaid planning and incapacity planning. Choosing the right structure depends on health, family dynamics, finances, and anticipated care needs. A solution that works well for one family may create serious limitations for another. Is a Life Estate the Right Option? For some Maryland residents, life estates can provide benefits, particularly when probate avoidance is a primary goal. The risks involved mean this approach is not appropriate for every situation. Understanding both the legal and financial impact is critical. Reviewing a Life Estate as Part of a Bigger Plan Life estates affect more than property ownership. They impact taxes, Medicaid eligibility, and a family’s ability to respond to changing circumstances. For this reason, life estates should be reviewed as part of a broader estate and elder law plan rather than used alone. If you are considering a life estate or already have one in place, speaking with a Maryland elder law attorney can help clarify risks and identify options before a crisis occurs. To schedule a confidential consultation, contact us onlin e, call our Columbia office at 443-339-5638, or dial 240-456-1657 to reach our Rockville office.

2026 Maryland Super Lawyers and Rising Stars Lists

Dec 19, 2025 in Blog

Managing Principal Stephen Elville, Principal Attorneys Shannon Goodwin and Shannon Ladner, and Associate Attorney Sara von Stein Echeverria Honored on the 2026 Maryland Super Lawyers and Rising Stars Lists

Authored by: Jeffrey D. Stauffer – Community Relations Director It was announced on Friday, December 19 th that Managing Principal Stephen Elville, Principal Attorneys Shannon Goodwin and Shannon Ladner, and Associate Attorney Sara von Stein Echeverria were honored on the 2026 Maryland Super Lawyers and Rising Stars Lists. Stephen R. Elville, J.D., LL.M. — Managing Principal Stephen R. Elville, President, CEO, and Managing Principal of Elville & Associates, P.C., has again been selected to the 2026 Maryland Super Lawyers List — his 11th overall and 10th consecutive year receiving this recognition. Mr. Elville’s practice centers on helping individuals and families through challenging legal landscapes with clarity, compassion, and technical skill. He leads the firm’s work in estate planning, elder law, special needs planning, tax planning and asset protection and preservation, long-term care planning, and more. Clients working with Mr. Elville benefit from his deep experience navigating both pre-crisis planning and complex crisis situations — giving them peace of mind and a personalized, long-term strategy. Throughout his career, Mr. Elville has built a reputation as one of Maryland’s most respected attorneys. His broad legal-technical knowledge, combined with a caring and client-focused approach, enables him to address a wide range of legal matters with confidence and clarity. In addition to his client work, he is a seasoned educator and speaker, regularly offering webinars and workshops for clients and the surrounding community, along with continuing education events for financial advisors. Mr. Elville is an active member of several professional organizations including the National Association of Elder Law Attorneys (NAELA), WealthCounsel, the Academy of Special Needs Planners, and as well as the EPIC Peer Group where he travels around the country each quarter learning from and teaching likeminded attorneys. He has held leadership roles including the past Chair of the Estates & Trusts & Elder Law Sections of the Howard County Bar Association, past President of the Coalition of Geriatric Services (COGS), and past Chair of the Elder Law & Disability Rights Section Council of the Maryland State Bar Association. He was also the long-term Chair for Law Day Maryland and recently served as Chair of the Pro Bono Subcommittee of the Elder Law Disability Rights Section Council. Outside of his legal practice, he is President of the Friends of Baltimore Classical Music, Inc. and Founder of the Elville Center for the Creative Arts, Inc. — a nonprofit dedicated to furthering music education for students with limited means. Mr. Elville had a feature story written about him in the national Super Lawyers Magazine about the Elville Center and his efforts surrounding this initiative. Along with his charitable endeavors, Mr. Elville also supports community organizations such as the Autism Society of Maryland, the Brain Injury Association of Maryland, the National Alliance on Mental Illness of Howard County, the Howard County Public Library System Veterans Book Group program, and more. Shannon Goodwin, J.D. — Principal Attorney Shannon Goodwin has been named to the 2026 Rising Stars List for a third consecutive year. In her role as Principal Attorney, she leads Elville and Associates’ Estate and Trust Administration Department along with estate planning and tax planning. Ms. Goodwin guides clients through every aspect of administering estates — from the probate process and inventory reporting, to accountings, final distributions, and all detailed estate tasks. Her insight and dedication help families navigate what can often be complicated and emotionally difficult processes. Her background includes undergraduate studies at North Carolina State University, followed by law school — during which she distinguished herself as a member of the Syracuse Law Review. After graduation, she gained important legal experience working as a Judicial Law Clerk for three years in the Circuit Court for Washington County, and in the District Court for Washington and Frederick Counties. She joined Elville and Associates in 2021, bringing with her a strong foundation and commitment to client care. Shannon F. Ladner, J.D. — Principal Attorney Shannon F. Ladner has earned her place on the 2026 Rising Stars List for the fourth year in a row. She leads the firm’s Estate Planning Department, where she assists clients through every stage of planning — from initial consultation to plan design and implementation, and ongoing updates as laws and life circumstances evolve. Ms. Ladner’s practice emphasizes estate planning and special needs planning. Her work is grounded in a thoughtful, client-centered approach, ensuring that each plan reflects the client’s values, goals, and unique family situation. During law school, she contributed her talents to the Human Trafficking Prevention Project Clinic, representing victims of human trafficking as a Rule 19 Student Attorney. After receiving her J.D., she served as a Judicial Law Clerk for Magistrates Susan M. Marzetta and Lori Joy Eisner in the Circuit Court for Baltimore City. Before joining Elville and Associates, she practiced at a small law firm in Towson, Maryland where she gained valuable experience representing clients in family law and criminal matters. Sara von Stein Echeverria, J.D. — Associate Attorney 2026 is Sara von Stein Echeverria’s first of what we see as many future inclusions on the Maryland Rising Stars list. Ms. von Stein Echeverria focuses her practice on estate planning, estate and trust administration, special needs planning, asset protection, and tax planning. She is known for her thoughtful, client-centered approach and her ability to guide individuals and families through complex planning decisions with clarity, empathy, and care. Sara works closely with clients to develop comprehensive plans that protect loved ones, reflect personal values, and provide long-term peace of mind. Sara earned her Juris Doctor, summa cum laude, from the University of Baltimore School of Law, where she distinguished herself through academic excellence and legal scholarship. She also holds a Master of Science from Birkbeck College, University of London, and a Bachelor of Arts, cum laude, from Dickinson College. Prior to joining Elville and Associates, her work included humanitarian and immigration-related legal advocacy, experience that continues to inform her compassionate and inclusive approach to client service. Sara is admitted to practice in Maryland and is an active member of the Maryland State Bar Association, the American Bar Association, and the Baltimore City Bar Association. To learn more about this year’s honorees and the entire team at Elville and Associates, please visit www.elvilleassociates.com. The firm is steadfast in its commitment to client education, compassionate legal service, and providing peace-of-mind solutions across estate planning, elder law, special needs planning, and beyond. Super Lawyers, a Thomson Reuters business, is a rating service of outstanding lawyers from more than 70 practice areas who have attained a high degree of peer recognition and professional achievement. The annual selections are made using a patented multiphase process that includes a statewide survey of lawyers, an independent research evaluation of candidates and peer reviews by practice area. The result is a credible, comprehensive and diverse listing of exceptional attorneys. The Super Lawyers lists are published nationwide in Super Lawyers Magazines and in leading city and regional magazines and newspapers across the country. Super Lawyers Magazines also feature editorial profiles of attorneys who embody excellence in the practice of law. For more information about Super Lawyers, visit SuperLawyers.com. #elvilleeducation