Broker Check

Learn How to Avoid These 6 Common Tax Errors

Knowing how you need to file your taxes depends on your income and filing status, as well as which deductions and credits you can claim. In this free ebook, we share some common errors to avoid.



Thank you! Oops!
What’s in the SECURE 2.0 Act?

What’s in the SECURE 2.0 Act?

January 15, 2023
Share |

The SECURE 2.0 Act is now law. It changes quite a few rules about retirement savings and might even help you move toward your goals faster. But, it’s like a lot of tax laws, there are a bunch of moving parts. You might want to talk with an experienced, well-trained CERTIFIED FINANCIAL PLANNER™ professional to get a clear picture of how your situation is changed.

As a fiduciary advisor who is ALWAYS an advocate for my clients, I would LOVE to talk with you about the new law and your retirement plans. Follow this LINK to find a time for us to talk.

Key takeaways:

  • The age to start taking RMDs increases to age 73 in 2023 and to 75 in 2033.
  • The penalty for failing to take an RMD will decrease to 25% of the RMD amount, from 50% currently, and 10% if corrected in a timely manner for IRAs.
  • Starting in 2024, RMDs will no longer be required from Roth accounts in employer retirement plans.
  • Catch-up contributions will increase in 2025 for 401(k), 403(b), governmental plans, and IRA account holders.
  • Defined contribution retirement plans will be able to add an emergency savings account associated with a Roth account.

Required IRA Distributions Pushed Back

If you were required to make IRA distributions in 2022, you must continue. But, if you did NOT have a required distribution last year, you will NOT have a required distribution in 2023.

 

Birth Year

Impact of SECURE Act 2.0

< 1951

No Change

1951-1959

Start at age 73

1960+

Start at age 75

 

Required IRA Distribution PENALTY Reduced

If you fail to make your required distribution, the penalty is reduced from 50% of the required amount to 25% of the required amount. And, if you fix it promptly, (within two years of the year you failed to take it) the penalty is reduced to 10% of the required amount.

In 2024, No RMDs for Roth accounts in employer retirement plans.

Up to now, if you retired and left your savings in the company retirement plan, you were required to make distributions from your Roth accounts along with your traditional accounts. In 2024, this will end.

In 2025, Catch-up Contributions Increased

For participants in 401(k), 403(b), governmental plans, and IRAs, in 2025, your catch-up contribution will be increased based on cost of living.

In 2024, Employer Plans Can Include Emergency Savings Account

Defined contribution retirement plans will be able to add an emergency savings account associated with a Roth account. The emergency account will be limited to a max contribution total of $2,500.

These are just the highlights. The SECURE Act 2.0 is extremely complex. There are a total of more than 100 different specific changes in 1,650 pages of the bill. As I mentioned earlier, it makes a TON of sense for you to seek some advice about how the changes affect your plans.

As a fiduciary advisor who is ALWAYS an advocate for my clients, I would LOVE to talk with you about the new law and your retirement plans. Follow this LINK to find a time for us to talk.

Yes, I am a CFP® professional. I’m always a fiduciary and I work on a fee basis. And yes, I’m still taking on a few great families to be part of my financial planning practice.

If this article has you thinking about your own circumstances, contact my office at rdunn@dunncreekadvisors.com. I am always happy to meet with people who are working on their retirement plans. Dunncreek Advisors does not provide legal or tax advice, nor is this article intended to do so.