Greetings and Happy New Year!
With more than 100 individual provisions aimed at modernizing the U.S. retirement planning system, SECURE 2.0 has been approved by congress and we at Tschetter Group have highlighted several key changes that may be of interest below:
Changes to Required Minimum Distributions (RMDs)
- One major change within the legislation is the extension of the start date for required minimum distribution age to 73 (starting on Jan. 1, 2023). It will again increase to age 75 un 2033 for an individual who attains age 74 after December 31, 2032.
- Starting in 2024, Roth accounts in a 401k or other employer-sponsored plans will be exempt from the RMD rules while the participant is alive. For 2023, Roth 401ks are still subject to the RMD rules (Roth IRAs, on the other hand, remain exempt from RMD rules).
Retirement Plan ‘Lost and Found’
- Includes the creation of a national lost and found registry and system for retirement account identification. This is one of the best workplace-focused changes in the bill.
529 Plan to Roth IRA Rollovers
- Includes new ability to roll unused money from a 529 college savings plan into a Roth IRA (several caveats apply).
- Starter 401(k)s may allow small businesses to deliver a useful retirement solution to employees while keeping both liability and costs down.
New Charitable Planning Opportunities
- As before, qualified charitable distributions can still be made starting at age 70 1/2. However, clients now have an opportunity to make a one-time $50,000 gift to a qualified charity of their choosing. Also starting in 2023, the current $100,000 limit for QCDs will be indexed by inflation.
If you’d like to read more about the changes made by Secure Act 2.0, we also have highlighted the following article which in our opinion does a great job highlighting most of the changes:
SECURE Act 2.0: Later RMDs, 529-to-Roth Rollovers, And Other Tax Planning Opportunities
Our team is available to talk through this change in more detail along with any other questions you might have regarding the other changes taking place as we enter 2023.
This content is provided for general information purposes only. The information was compiled from sources that we believe to be reliable, however, we cannot guarantee accuracy. Tschetter Group does not provide tax or legal advice. Please consult your legal or tax professional for specific information.