Secure Act 2.0 Enacted
On December 29, 2022, the Secure 2.0 Act was enacted as part of the broader Consolidated Appropriation Act of 2023. The Secure 2.0 Act makes substantial changes to the rules for retirement accounts.
Major changes in the new law include the following:
Required Minimum Distributions will now start at age 73. The previous start year for taking “RMD’s” was age 72
This new law applies to Individuals reaching 72 after December 31, 2022
Potential penalties for failure to take an RMD will reduce from 50% to 25%. A further penalty reduction from 25% to 10% is possible
Certain employer matching contributions for 401(K), 401(B), and government 457(B) plans are permitted, starting in 2023, to provide participants with an option to receive employer contributions on a ROTH BASIS
Qualified Charitable Distributions- Starting in 2023, a one-time only $50,000 QCD to a charitable gift annuity, charitable remainder unitrust, or a charitable remainder annuity trust will be allowed
Roth Changes- Unlike Roth IRA, Roth 401K’s had required minimum distributions. Beginning in 2024, this requirement is eliminated
529 Plans- 529 plans that are in existence for at least 15 years, will be permitted to rollover up to $35,000 to a Roth IRA for the same beneficiary
Required Beginning Date for taking Required Minimum Distributions is technically April 1st following the year one attains age 73. Taxpayers opting for this delay will need to take two annual distributions in this first year
Roth Sep Plans will be available in 2023
Catch up contributions for high earners- Starting in 2024 earners making greater than $145,000 per year must have their 401K catch up contributions funded to a Roth 401K
Employer matching contributions are eligible to be put into a Roth 401K. These will be taxable to the employee.
There is a litany of smaller changes built into the law
If you have any questions on how the Secure 2.0 Act affects you, give us a call at 516-294-5287.
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