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SECURE Act 2.0

Robin Freese
January 5, 2023

There were over 100 changes made in the SECURE Act 2.0, which was signed into law on December 29th, 2022. Though the bill addresses ‘Enhanced access to retirement funds during times of need for private sector firefighters,’ the bullet points listed below provide a macro summary of the major changes relevant to you.

 

RMD Starting Age Pushed Back (Again)

    • RMD starting age is pushed back to age 73 (for those turning 73 between 2023 and 2032)
    • RMD starting age is pushed back to age 75 (for those turning 73 between 2033 and future years*)
      • Further need for protective planning, big tax crunches (fewer years to spread out income) (NIIT/IRMAA)
      • No impact to age at which QCDs can be made

529 to Roth IRA Transfers

    • Effective 2024 – 529 Accounts can be transferred directly to the Roth IRA of the 529 beneficiary (up to $35,000)
    • Beneficiary must have “compensation”
    • The 529 plan must have been maintained for >15 years (unclear how the change in beneficiary will be treated)
    • Subject to IRA contribution limits

Roth Savings Opportunities Increased

    • Effective now – Roth SIMPLE and Roth SEP accounts are now available
    • Additional employer contributions eligible for Roth accounts
    • Higher wage earners (>$145,000) required to use Roth option for catch-up contributions

IRA Savings

    • Effective 2024 – Savings amounts will be indexed to inflation moving forward (previously $100 increments)

401K (And Similar Plans) Catch-Up Contribution Limit

    • Effective 2025 – Catch-up contributions limited to $10,000
    • Applicable only to participants turning 60, 61, 62, or 63 during the year

Penalties for Missed RMDs – Reduced

    • Effective now – penalty reduced to 25% (from 50%)
    • If fixed during “correction window”, reduced to 10%
If you have additional questions regarding the specifics of this act or how these changes may affect your financial situation, please reach out to your advisor.

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