The Consolidated Appropriations Act, 2023, was signed into law on December 29, 2022, that includes the Secure 2.0 Act of 2022 which provided updates for retirement for individuals. Below are highlights of the bill:

  • IRA Required Minimum Distributions (RMDs) age changed to 73 in 2023 and 75 in 2033. This applies to those who have not already started their RMDs.
  • Starting December 31, 2023, Roth funds in a qualified employer plan are not subject to a RMD.
  • A spouse inheriting an IRA can use the deceased spouse’s age for calculating the RMD if it is beneficial.
  • IRA catch-up contributions are now indexed for inflation.
  • Higher catch-up limits apply at ages 60, 61, 62, and 63. The Law increases these limits to the greater of $10,000 or 50% more than the regular catch-up amount starting in 2025.
  • Employer contributions to 401k, 403b, SIMPLE IRAs, and SEP plans can be Roth contributions if elected.
  • Starting in 2024, you can roll over up to $35,000 (lifetime max) of unused funds from a 529 plan into a Roth IRA in the beneficiary’s name if the account has been open for 15 years or more.
  • A surviving spouse can now elect to be treated as the deceased employee for purposes of the RMD rules. This is effective for calendar years beginning after December 31, 2023.
  • There is now a database of “Lost” retirement accounts that users can search.
  • Starting in 2024, you may take emergency expense distributions of up to $1,000, from your retirement plan without penalty. For 3 years, from the time of the distribution, you have the option to repay the funds into your retirement plan.
  • Long-term, part-time workers are now allowed to participate in the employer’s 401k plan if they have one year of service (1,000 hours) or 3 consecutive years with at least 500 hours of service. Starting in 2024 it is reduced to 2 years (for retirement plan vesting purposes).
  • Reduces the penalty for failure to take RMDs from 50 to 25%. Also, if a failure to take an RMD from an IRA is corrected in a timely manner, the excise tax on the failure is further reduced from 25 to 10%.
  • Starting in 2024, the bill eliminates the RMD from employees’ Roth employer-sponsored retirement plans for those who haven’t started taking their distributions.
  • Starting in 2026, individuals are permitted to request retirement plans to distribute up to $2,500 per year for the payment of premiums for certain specified long-term care insurance contracts. Distributions from plans to pay such premiums are exempt from the additional 10% tax on early distributions.

Staying up-to-date on the latest bills is important. As financial advisors, we are constantly looking at what is happening now and in the future. Our goal is to help you navigate the road to financial wealth by providing you with information and sound advice. As always, reach out if you have questions.

Jason entered the financial planning industry in 2013. He graduated from Radford University with a degree in finance and a minor in psychology. Jason has been on Jan’s team since 2017 and is committed to providing the best financial planning advice and services for our clients. He holds the Chartered Retirement Planning Counselor designation. Jason enjoys music, backpacking, hiking, travel, and time with his family.

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