With the new year in full swing, we wanted to provide you a few insights related to the recent passage of the SECURE Act 2.0 in December 2022. Nearly 3 years to the day after the passing of its predecessor, the SECURE Act, this recent spending bill includes much-anticipated and long-awaited changes to retirement planning regulations and tax guidance that may have an impact on your financial picture.
The SECURE Act 2.0 contains 92 new provisions to promote savings, boost incentives for businesses, and offer more flexibility to those saving for retirement. Greenwood Gearhart is dedicated to staying educated on how this package impacts our client base but would like to highlight a few of the major provisions for you to be aware of.
- Effective January 1, 2023 the RMD age has been increased to 73 and up to 75 in 2033
- Also effective in 2023, the tax penalty imposed for not taking RMDs has been reduced from 50% to 25%.
- Effective in 2024, Excess 529 balances of up to $35,000 can be rolled over to a Roth IRA for the beneficiary. The rollover allowance starts in 2024 and comes with several limits.
- Effective in 2025, Catch-up contributions for individuals between ages 60 and 63 will increase in 2025 for 401(k), 403(b), governmental plans, and IRA account holders.
We are continually digesting and interpreting this important legislative action in an effort to better address your constantly evolving retirement and financial planning needs. As a resource to you, we have included a link below to a more detailed list of some of the important provisions within the legislation.
Please reach out to us at any time with any questions or feedback you might have.