SECURE 2.0: The Planning Levers That Actually Matter for High-Income Business Owners

Updated September 5, 2026.

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.

Surplus defined benefit assets can create difficult questions at plan termination. SECURE 2.0 extended and modified a limited provision for qualified transfers of excess pension assets to retiree health and life insurance accounts. Funding thresholds, benefit protections and other conditions apply. This is not a general way to recover excess assets or a reason to fund a plan aggressively without an actuary and tax counsel evaluating the specific plan.

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. Before SECURE 2.0, premiums were subject to both an indexed dollar cap and a limit of 25% of eligible account balances. For someone with several million dollars in qualified accounts, the dollar cap generally constrained the purchase before the percentage cap did.

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

For 2026, participants subject to the higher-earner Roth catch-up rule use a $150,000 threshold measured against 2025 FICA wages from the sponsoring employer. Catch-up contributions covered by that rule must be Roth. The test is not household income or all business income; the administrator should determine how it applies to each participant.

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.

A Roth conversion generally accelerates income tax into the conversion year. It may reduce future required minimum distributions from traditional accounts, and a Roth IRA has no lifetime RMDs for its original owner. It does not remove the Roth account from the owner’s taxable estate. Qualified withdrawals can be tax-free, but the result depends on conversion taxes, distribution rules, future tax rates and the family’s need for liquidity. Model the conversion with the CPA alongside the timing and structure of a business sale.

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.

Eligible direct transfers from a 529 plan to the beneficiary’s Roth IRA are subject to a $35,000 lifetime limit. The account must satisfy a 15-year requirement, and recent contributions and their earnings are excluded under a five-year lookback. The annual transfer is also limited by eligible compensation and the applicable IRA contribution limit, reduced by other IRA contributions for the beneficiary. The general IRA limit is $7,500 in 2026. Confirm all conditions before directing a transfer.

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.

Sources for this update: IRS catch-up contributions; IRS 2026 retirement limits; IRS estate tax; IRS guidance on excess pension transfers; IRS Publication 590-A.