📅 2026 Update: Key Changes in Retirement Savings and Consumer Finance

Since the original article on the Investment Act of 1940 was written, there have been significant updates to laws affecting retirement savings and consumer finance. The SECURE 2.0 Act has brought changes that many people should know about, especially concerning retirement accounts. This update will cover these important changes.

The earlier article continues further down the page.

📈 SECURE 2.0 Act Implementation

The SECURE 2.0 Act was enacted on December 29, 2022. This legislation raised the Required Minimum Distribution (RMD) age to 73 for individuals born between 1951 and 1959. This change took effect in 2023.

For those born in 1960 or later, the RMD age will increase to 75 starting in 2033.

  • 🔄 RMD Penalty Reduction: The penalty for not taking the RMD has decreased from 50% to 25% of the required amount. If the mistake is corrected within two years, the penalty further reduces to 10% for IRAs.

💰 Roth 401(k) RMD Exemption

Starting in 2024, Roth accounts in employer retirement plans, like 401(k)s and 403(b)s, will no longer require RMDs. This change allows account holders to keep their funds growing without being forced to withdraw money.

🎓 529-to-Roth IRA Rollovers

Beginning in 2024, individuals can roll over up to $35,000 from 529 college savings plans to a Roth IRA. This option provides flexibility for those who may not need the funds for education.

🏦 Student Loan Payment Matching

As of 2024, employers can treat qualified student loan payments as retirement contributions. This means employees can receive matching contributions based on their student loan payments, helping them save for retirement while paying off loans.

📌 Key Points Summary

  • 📅 RMD age raised to 73 or 75.
  • 🔽 RMD penalty reduced to 25% or 10%.
  • 🚫 No RMDs for Roth accounts in employer plans.
  • 🎓 Roll over $35,000 from 529 plans to Roth IRAs.
  • 💼 Employers can match student loan payments for retirement savings.

💡 Tips for Navigating Retirement Accounts

Review the details of your unique situation with your attorney to ensure you're making informed decisions.

📊 Understand RMD Rules

It's crucial to know when to start taking RMDs based on your birth year. Those born between 1951 and 1959 must start at 73, while those born in 1960 or later must start at 75.

📈 Take Advantage of Catch-Up Contributions

If you're between 60 and 63, you can contribute $11,250 to eligible retirement plans starting January 2025. This can significantly boost your retirement savings.

🔄 Explore Roth IRA Benefits

Consider rolling over funds from a 529 plan to a Roth IRA if you're not using them for education. This option can help you take advantage of tax-free growth.

🏦 Review Your 401(k) Fees

Be aware of the fees associated with your 401(k) plan. Some plans, especially from smaller companies, may have higher fees, which can eat into your returns.

📅 Plan for Emergency Withdrawals

Starting in 2024, you can withdraw up to $1,000 from retirement accounts for emergencies without a penalty. This can provide a safety net when unexpected expenses arise.

❓ Frequently Asked Questions

❔ What is the new RMD age under SECURE 2.0?

Individuals born between 1951 and 1959 must begin RMDs at 73, while those born in 1960 or later must start at 75.

💼 Can I roll over 529 plan funds?

Beginning in 2024, you can roll over up to $35,000 from a 529 college savings plan to a Roth IRA, subject to certain conditions.

📉 What happens if I miss my RMD?

The penalty for failing to take an RMD has decreased from 50% to 25%. If corrected within two years, it can drop further to 10% for IRAs.

🏦 Are there penalties for emergency withdrawals?

Starting in 2024, you can withdraw up to $1,000 per year from retirement accounts for emergencies without incurring the 10% early withdrawal penalty, with repayment options available.

🎓 How do student loan payment matches work?

Employers can treat qualified student loan payments as retirement contributions for matching purposes, which helps employees save for retirement while paying off their student loans.

📅 When do catch-up contributions increase?

Starting January 2025, individuals aged 60 to 63 can make catch-up contributions of $11,250 to eligible retirement plans, up from the previous limit of $8,000.

⚖️ Recent Cases Impacting Consumer Finance

There have been recent court rulings that affect how retirement accounts and consumer finance operate. One significant case was the removal of the Department of Labor's Retirement Security Rule, which aimed to define investment advice fiduciaries.

You can browse more rulings on the news page for the latest updates.

End of October 2026 Update





What is the Investment Act 1940?




Guide to the Investment Act 1940

• The Investment Act 1940, or better known as the Investment Company Act, was a formal act of Congress that in essence, formed the backbone of the financial regulatory platform in the United States of America. Passed as a United States Public Law on August 22, 1940, the Investment Act 1940 was a set of extensive rules issued by the Securities and Exchange Commission to prevent fraudulent and misguided behavior in the financial markets. 


History of the Investment Act 1940:



• Following the creation of the mutual in 1924, investors, as a result of the success of the mutual fund, encouraged innovation in the market. Five years after the creation of the fund however; the Wall Street Crash of 1929 rocked investor confidence. In response to the economic calamity, the United States Congress created the Securities Act of 1933 and the Securities Exchange Act of 1934 to better regulate the stock market and the securities industry as a whole. Given the destruction caused by the Great Depression and more specifically the Stock Market Crash of 1929, legislation aimed to protect the interest of the American public and re-instill their confidence in the market.


• In 1940, Investment companies were still considered in infantile stages. To strengthen investors’ confidence in various securities and public companies and to protect the public interest from new formations of securities, Congress passed the Investment Act 1940.


• When passed, the Investment Act 1940 established separate standards by which investment companies were to be regulated. The Investment Act 1940 defined and regulated all investment companies, including the newly-formed mutual fund market. Prior to the passing of the Investment Act 1940, mutual funds were not only deregulated, but not even defined. 

Effects of the Investment Act 1940:

• The Investment Act 1940 aims to mitigate and eradicate all conditions which adversely affect the national public interest and the overall interest of investors in the market. More specifically, the Investment Act 1940, regulated conflicts of interest in securities exchanges and investment companies. The investment Act 1940 also protected the public by legally requiring disclosure of financial materials concerning an investment company.

• Additionally, the Investment Act 1940 placed restrictions on mutual fund activities, including their ability to engage in short selling. That being said, the Investment Act 1940 did not institute provisions for the United States Securities and Exchange Commission to make specific judgments concerning the supervision of an investment company’s actual investment decisions. The legislation; however, did require such companies to publicly disclose investment information and information regarding their own financial health. 


Who does the Investment Act 1940 apply to?

• The Investment Act 1940 applies to all investment companies, but will provide exemptions to several types of investment companies from the act’s coverage regulations. The most common exemptions, which are found in various sections of the act, are not placed on Hedge Funds for example. The Investment Act 1940 is a Federal Law and is therefore not to be interpreted individually among the states.