SECURE 2.0: The Planning Levers That Actually Matter for High-Income Business Owners
Ascent Wealth Strategies
Most of what gets written about SECURE 2.0 is plan sponsor compliance. New deadlines, Roth catch-up rules, paper statement requirements. Your HR team needs to read that. None of it is the most interesting part of the law if you are the owner.
Buried inside SECURE 2.0 are a handful of structural changes that quietly reshape four planning conversations every high-income business owner should be having: how aggressively to fund a defined benefit or cash balance plan, how to manage required minimum distributions on a large qualified balance, how to position Roth dollars before a sale, and how to move money to the next generation tax-efficiently. These are the levers that move real numbers. Here is how we are thinking about them.
1. Cash Balance and Defined Benefit Plans Just Got Materially More Usable
The most overlooked SECURE 2.0 change for high-income owners is what the law did to the economics around defined benefit and cash balance plans. For an owner in peak earning years, these plans already allow deductible contributions well into six figures annually, on top of a 401(k) and profit sharing combination. Total deductible employer contributions for an older owner can comfortably exceed $300,000 to $400,000 in a single year, all against ordinary business income.
The historical hesitation has been the trapped-asset problem. If a plan ends up overfunded at termination, the excise tax on returning excess assets to the employer can be punishing. That risk made many owners and their advisors fund DB plans more conservatively than the structure technically allows. SECURE 2.0 now permits surplus defined benefit assets to be redirected to fund retiree health and life insurance benefits inside the plan, which materially reduces that downside. The result is that aggressive DB funding strategies, particularly in the years leading up to a sale or a wind-down, are more defensible than they were two years ago.
The modernized family attribution rules, in effect since 2024, change the picture for a second category of owner. Under the old rules, two spouses running separate unrelated businesses were often force-aggregated into a single controlled group for retirement plan purposes, which collapsed favorable plan design across both companies. SECURE 2.0 narrows the attribution. For two-earner households where each spouse owns a separate operating business, this can quietly reopen plan design options (independent cash balance plans on each side, for example) that were previously unavailable.
None of this changes the case for plan design as a primary lever. It does change how confidently a sophisticated owner can lean on it. If your last real plan design review was before 2023, the math has moved.
2. The QLAC Has Quietly Become a Useful RMD Tool Again
Qualified Longevity Annuity Contracts have existed since 2014, but they were too constrained to matter for affluent retirees. The old rule capped the premium at the lesser of $145,000 or 25% of qualified account balances. For an owner with several million dollars in IRAs and 401(k)s, the 25% test was the binding constraint and the cap was small relative to the overall balance.
SECURE 2.0 removed the percentage limitation entirely and raised the dollar cap, which for 2026 sits at $210,000 per person indexed for inflation. A married couple can carve $420,000 out of the balance the IRS uses to calculate Required Minimum Distributions. Payments do not have to begin until as late as age 85.
For an owner approaching age 73 with a seven- or eight-figure qualified balance and no need to draw it for current expenses, this is a clean way to defer RMDs on a meaningful slice, reduce Medicare IRMAA exposure, and lay in a longevity income floor at the same time. It will not solve a multi-million-dollar RMD problem on its own. It will move the needle on bracket management and IRMAA in a way that is hard to replicate elsewhere, and it pairs well with Qualified Charitable Distributions for owners with existing philanthropic intent.
3. The Forced Roth Catch-Up Is a Signal About Pre-Sale Roth Positioning
Starting in 2026, any plan participant age 50 or older who earned more than $145,000 from the sponsoring employer in the prior year must make their 401(k) catch-up contributions on a Roth basis. The pre-tax catch-up is no longer available to high earners.
On its own, the dollar amount is small and not particularly interesting. What is interesting is what the provision implies about the planning conversation underneath it.
Congress has now used the Roth structure as a default for high earners in two consecutive retirement reform bills. The direction of travel is clear. For an owner with a large traditional 401(k) or rollover IRA balance and a planned business sale in the next decade, the more strategic question is not whether the catch-up should be Roth. It is whether a meaningful portion of the broader traditional balance should be moving toward Roth on a deliberate schedule, particularly in the years bracketing the sale.
Roth conversions executed in tactically chosen years (a transition year between active and passive income, a year with a large depreciation or charitable offset, a year before installment sale payments begin) can move six- and seven-figure balances into a tax-free environment at known rates. Done well, this collapses future RMDs, removes the converted balance from the taxable estate at the post-conversion growth rate, and provides a tax-free pool for the post-sale years when ordinary income drops and conversion math reverses. The forced Roth catch-up is a small visible signal pointing at this much larger and far more valuable planning lever.
4. The 529-to-Roth Rollover Is a Generational Tool, Not a College Footnote
Most coverage of the new 529-to-Roth provision frames it as a relief valve for parents who overfunded a 529. That framing misses the more useful application for affluent families.
Up to $35,000 of a 529 balance can now be rolled, lifetime, into a Roth IRA owned by the 529 beneficiary, tax-free and penalty-free. The 529 must have been open at least 15 years, the rolled funds must have been in the account at least 5 years, the beneficiary must have earned income equal to the rollover amount in that year, and the annual rollover is limited to the Roth IRA contribution cap ($7,500 in 2026).
The income limits that prevent a high earner from contributing directly to a Roth IRA in their own name do not apply to this transfer at the beneficiary level. That means a properly aged and funded 529, started early enough for the 15-year clock to run while the child or grandchild is still in school, can push $35,000 of Roth contribution room per beneficiary into accounts that compound for fifty or sixty years before they are drawn down. The dollars are small. The compounded result over that horizon is not, and the strategy is replicable across multiple grandchildren by design.
Families with the wealth to overfund 529s on purpose, particularly grandparents thinking about the most tax-efficient way to seed grandchildren, now have a structural reason to do so deliberately.
Contribution figures referenced are illustrative and depend on individual facts including age, compensation, business structure, employee census, and actuarial assumptions. Actual deductible contributions and plan design feasibility vary materially by situation and require formal review by a qualified actuary and tax professional. Strategies discussed may not be appropriate for every owner.
Ascent Wealth Strategies is a dba of Clear Creek Financial Management, LLC. Clear Creek Financial Management, LLC is a Registered Investment Adviser. Advisory services are only offered to clients or prospective clients where Clear Creek Financial Management, LLC and its representatives are properly licensed or exempt from licensure. This document is solely for informational purposes. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by Ascent Wealth Strategies or Clear Creek Financial Management, LLC unless a client service agreement is in place. Ascent Wealth Strategies provides strategies for estate and / or tax planning. These strategies do not constitute tax or legal advice. Consult legal or tax professionals for specific information regarding your individual situation.