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Navigating the SECURE Act 2.0: Roth Matching, 529 Conversions, and More

Aloha, Kālā Capital Fam!

As we embark on the journey through 2024, it's essential to stay informed about the latest developments in the financial planning world. This year, we're seeing the significant changes brought about from the SECURE Act 2.0 in the realm of retirement and education savings, as well as innovative approaches to managing student loan debt. Let's dive into the key points reshaping the financial landscape in 2024.

Roth Matching Options for 401(k)s

One of the notable updates being implemented this year is the introduction of Roth matching options for 401(k) plans. Traditionally, 401(k) plans offered pre-tax contributions, allowing employees to defer taxes until retirement. However, with the new provisions, employers may now offer Roth contributions with matching incentives. This means employees can contribute after-tax dollars to their 401(k) accounts and potentially benefit from tax-free withdrawals in retirement. This is a game changer if we take into account the lifetime tax savings you can achieve for your retirement years.

529 to Roth Conversions

Another significant development is the ability to convert funds from a 529 college savings plan to a Roth IRA. This option provides families with greater flexibility in managing education savings and retirement planning if your child does not utilize all of the funds within the 529 available to them.. Transferring funds from their 529 to their Roth IRA could give them a nice jumpstart to their retirement goals. Beware that there are annual restrictions and lifetime maximums to be aware of. Additionally, the 529 account needs to be in the beneficiary’s name for at least 15 years to be eligible for this awesome benefit.

Employer Matching to Student Loans

In response to the growing burden of student loan debt, employers are exploring innovative solutions to support their employees. One such approach is employer matching contributions toward student loan debt. This groundbreaking initiative allows employees to receive employer matching funds for payments made toward their student loans. It not only accelerates debt repayment but also enhances overall financial well-being by reducing the financial strain of student loan obligations. It's a win-win for employers and employees alike.

While many of these changes are in effect by law, it can take time for companies to adopt and implement the changes. If your employer is not yet offering a Roth or student loan match, hang tight, they could in the future. There are also plenty more changes detailed in the SECURE 2.0 act, these are just a few that we find the most noteworthy. 

Your Financial Journey, Our Expertise

As we embrace the opportunities and challenges of 2024, rest assured that your financial advocates at Kālā Capital are here to support you every step of the way. We'll help you seize the benefits of the new provisions while ensuring that your financial plans remain aligned with your goals.

Stay tuned for more insights and updates throughout the year as we continue to navigate the ever-changing world of finance together.

Mahalo for being part of the Kālā Capital family. Your financial success is our priority, and we're dedicated to helping you achieve it.

With gratitude,

Chris - Your Financial Advocate

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