SECURE 2.0 Act Lets Retirees Defer Some Taxes Longer
Here’s how retirees can benefit from changes in required minimum distributions (RMDs), qualified longevity annuities and IRA catch-up contributions.

A retirement crisis looms. Americans aren’t saving enough, and the aging of the population may require trimming Social Security benefits eventually. Congress recently passed the SECURE 2.0 Act to help people save more for retirement by boosting tax breaks. It builds on the original SECURE Act.
Three provisions will affect the most people. Here’s how to take advantage of them.
Age Change for RMDs
Required minimum distributions (RMDs) from traditional IRAs, SEPs, 401(k)s and other retirement accounts now must begin at age 73, up from age 72.

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Retirees who don’t need the income thus get an extra year for their retirement-account money to grow without taxes. Just one more year of tax deferral can make a modest but real difference in how much money you’ll have for retirement later on. RMDs show up as taxable income on your 1040 Form and are also taxed by many states.
To take advantage of this, you’ll need other sources of income until you turn 73. Fortunately, interest rates are up, and today you can earn more on money-market accounts, bank certificates of deposit and fixed-rate annuities, which are issued by insurers and typically pay higher rates than bank CDs of the same term.
QLAC Rules Get More Generous
Retirees can now defer taxes on more of their money thanks to more generous rules on qualified longevity annuity contracts (QLACs). An IRA owner can now place up to $200,000 of his or her IRA balance in a QLAC, up from $145,000. The previous restriction that limited contributions to 25% of the account balances in IRAs has been lifted.
Here’s why it’s valuable: A QLAC is a type of deferred income annuity designed to meet IRS requirements that’s only available for retirement plans. The money in one is excluded from assets on which your future RMDs are calculated. For instance, if you’ve placed $200,000 in a QLAC and turn 75 this year, you’ll reduce your 2023 RMD by $8,130, according to www.investor.gov.
You pay a single premium and then choose when to start receiving a stream of guaranteed lifetime income by age 85 at the latest. Deferring RMDs lets you keep more of your retirement plan assets intact and tax-deferred. But the biggest benefit is creating a guaranteed lifetime stream of income that will never decrease no matter how long you live. It’s essentially a private pension that you control.
You can choose an individual or a joint lifetime payout, with the latter paying out income until the second spouse dies. The joint payee must be a spouse, which satisfies IRS death-transfer rules. There’s also a cash-refund option, in which beneficiaries can get a lump-sum payout for any of the initial deposit premiums not yet paid out at the death of the annuitant(s).
Each spouse can now allocate up to $200,000 to a QLAC.
IRA Catch-Up Will Be Indexed for Inflation
The IRA catch-up provision, which lets people 50 or older add up to $1,000 beyond the normal contribution limit, will be indexed for inflation starting in 2024. Additionally (though not part of the SECURE 2.0 Act), the maximum you can contribute to your standard and/or Roth IRAs this year is $6,500 if you’re under 50 and $7,500 if you’re 50 or older. That’s a $500 increase.
The SECURE 2.0 Act gives you the chance to defer taxes on more of your retirement money via the extra year of deferral and more generous limits on QLACs. If you have the cash flow or savings that let you take advantage of these opportunities, you can benefit.
Annuity expert Ken Nuss is the founder and CEO of AnnuityAdvantage, a leading online provider of fixed-rate, fixed-indexed, and immediate-income annuities. He launched the AnnuityAdvantage website in 1999 to help people looking for their best options in principal-protected annuities. One of America’s top experts on annuities, he writes on retirement income and annuities regularly. A free quote comparison service with interest rates from dozens of insurers is available at www.annuityadvantage.com or by calling (800) 239-0356.
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

Retirement-income expert Ken Nuss is the founder and CEO of AnnuityAdvantage, a leading online provider of fixed-rate, fixed-indexed and immediate-income annuities. Interest rates from dozens of insurers are constantly updated on its website. He launched the AnnuityAdvantage website in 1999 to help people looking for their best options in principal-protected annuities. More information is available from the Medford, Ore., based company at www.annuityadvantage.com or (800) 239-0356.
-
Higher Summer Costs: Tariffs Fuel Inflation in June
Tariffs Your summer holiday just got more expensive, and tariffs are partially to blame, economists say.
-
Don’t Miss Alabama Tax-Free Weekend 2025
Tax Holiday Ready to save? Here’s everything you need to know about the 2025 back-to-school Alabama sales tax holiday.
-
New SALT Cap Deduction: Unlock Massive Tax Savings with Non-Grantor Trusts
The One Big Beautiful Bill Act's increase of the state and local tax (SALT) deduction cap creates an opportunity to use multiple non-grantor trusts to maximize deductions and enhance estate planning.
-
Know Your ABDs? A Beginner's Guide to Medicare Basics
Medicare is an alphabet soup — and the rules can be just as confusing as the terminology. Conquer the system with this beginner's guide to Parts A, B and D.
-
I'm an Investment Adviser: Why Playing Defense Can Win the Investing Game
Chasing large returns through gold and other alternative investments might be thrilling, but playing defensive 'small ball' with your investments can be a winning formula.
-
Five Big Beautiful Bill Changes and How Wealthy Retirees Can Benefit
Here's how wealthy retirees can plan for the changes in the new tax legislation, including what it means for tax rates, the SALT cap, charitable giving, estate taxes and other deductions and credits.
-
Portfolio Manager Busts Five Myths About International Investing
These common misconceptions lead many investors to overlook international markets, but embracing global diversification can enhance portfolio resilience and unlock long-term growth.
-
I'm a Financial Planner: Here Are Five Smart Moves for DIY Investors
You'll go further as a DIY investor with a solid game plan. Here are five tips to help you put together a strategy you can rely on over the years to come.
-
Neglecting Car Maintenance Could Cost You More Than a Repair, Especially in the Summer
Worn, underinflated tires and other degraded car parts can fail in extreme heat, causing accidents. If your employer is ignoring needed repairs on company cars, there's something employees can do.
-
'Drivers License': A Wealth Strategist Helps Gen Z Hit the Road
From student loan debt to a changing job market, this generation has some potholes to navigate. But with those challenges come opportunities.