I hope you had a fantastic end to 2022 and are feeling refreshed and ready for 2023.
After months of debate, Congress finally passed some major changes to retirement laws at the end of 2022.1
The Setting All Community Up for Retirement Enhancement (SECURE) Act 2.0 changes are numerous, and complex, and will roll out over several years.
So, let’s focus for now on some changes for 2023:2
- The age at which required minimum distributions (RMDs) begin increased to 73 in 2023. This change impacts individuals born between 1951 and 1959.
- The penalty for missing all or part of an RMD decreased to 25% in 2023. However, if you correct the past due RMD and pay taxes on it within two years, the penalty drops to 10%.3
- Qualified Charitable Distributions have a few more options. Starting in 2023, individuals who are aged 70½ or older can gift a one-time amount of $50,000 (adjusted for annual inflation) to a charitable remainder unitrust (CRUT), charitable remainder annuity trust (CRAT), or charitable gift annuity (CGA).4
- Roth savings get a boost. Starting in 2023, employers can offer workers the choice to receive vested matching contributions directly to their Roth account, where they’ll grow tax-free.2 Also, Roth contributions to SIMPLE and SEP IRAs are authorized in 2023.5 However, we’ll have to wait for the IRS and custodians to work out procedures before individuals can take advantage of these new opportunities.
- More individuals can take early distributions from their retirement accounts without penalty. Starting this year in 2023, victims of disasters and terminally ill people will be able to access their retirement accounts early without incurring a 10% penalty.6 There’s plenty of fine print, so let’s have a conversation if you think you might be eligible.
Bottom line: There’s A LOT to unpack in the new laws. Many new rules, including changes to catch-up contributions and 529 plans, will roll out in 2024 and 2025.
As we’ve learned with previous new regulations, Congress might enact new laws, but we often must wait for the IRS and other agencies to catch up before we can fully make use of them.
Stay tuned for more updates as the new rules are revealed.
Do you have any questions right now? Connect with our PREVAIL team. We’ll schedule a time to have a one-on-one conversation.
Investment Advisory services are offered through Prevail Innovative Wealth Advisors, LLC, a federally registered investment advisor. Registration with any securities authority is not an endorsement of the services offered by the investment adviser. Fixed insurance products and services are offered through Prevail Strategies, LLC, a licensed insurance agency. A client may receive investment advice in addition to fixed insurance recommendations as a part of the financial planning process. Prevail Innovative Wealth Advisors, LLC and Prevail Strategies LLC have common ownership. Prevail Innovative Wealth Advisors, LLC and Prevail Strategies LLC do not provide tax or legal advice. You should always consult your CPA or tax professional for decisions involving tax implications present and future.