How The SECURE 2.0 Act Impacts Your Retirement Savings

By: Abe Shearer and Jennifer Shirkey

It is rumored that Albert Einstein once joked to his friend and accountant that, “The hardest thing in the world to understand is income taxes.”

One thing is for sure—with how frequently tax laws change, it’s certainly difficult to eep thin s strai ht. n ust the last handful of years, we have seen the Tax Cuts and Jobs Act of 2017, the SECURE Act of 2019, and the CARES Act of 2020. We also now have the SECURE 2.0 Act of 2022 (SECURE 2.0), which became law on December 29, 2022. SECURE 2.0 builds on the original SECURE Act to implement sweeping changes for retirement accounts. This article highlights key updates from SECURE 2.0.

Required Minimum Distributions (RMDs) – SECURE 2.0 raises the starting age for beginning these mandatory taxable distributions and also lowers the penalty for missing an RMD.

• Starting Age: Beginning in 2023, retirees with IRAs and workplace retirement plans must begin taking withdrawals at age 73, increasing to age 75 in 2033.

• Previously, age 72 was mandated by the original SECURE Act, and before that was 70.5 up until January 1, 2020.

• Penalty: The penalty for not taking RMDs has been lowered to 25% of the RMD amount not taken. If full corrective action is taken later, the penalty gets reduced to 10%.

• Previously, this penalty was a harsh 50% for those who overlooked taking their RMD.

TCARE FROM PAGE 8

TCARE can actually save time for caregivers as it provides information that uic ly identifies the areas of reatest

Gardens FROM PAGE 5 need for stress reduction.

• Intergenerational opportunities to instill responsibility in the grandchildren or even some neighborhood children through teaching and demonstrating simple garden tasks and chores.

A local community garden can be found just off Resort Drive in Massanutten; its lower location offers plenty of sunshine, easy access, and convenience, and also avoids a lot of the “food seeking” deer population and many other abundant wildlife found the higher you travel on the mountain.

Qualified Charitable Distributions (QCDs) – Currently, individuals aged 70.5 or older may use a QCD to donate up to annually to ualified charities directly from their IRAs. QCDs are excluded from taxable income, and you don’t have to itemize deductions to make a QCD. SECURE 2.0 enhances QCDs by inde in the limit for in ation starting in 2024. In addition, a one-time QCD may now be made to a charitable remainder trust (CRT) or charitable gift annuity (CGA) up to a maximum of $50,000.

Caregivers can access the TCARE initial assessment online at vpas.info or get more information by calling 540820-8567. Following a brief initial as-

Board member, Elizabeth “Liz” Walker, of Massanutten Property Owners Association (MPOA), chairs the Community Garden, and according to Bradford Dyjak, Administrator for MPOA, “Liz has worked industriously over the years with volunteers to ensure the garden is up and running to continue to provide well-maintained plots for MPOA owner rentals.”

Ms. Walker shared that in 2017, a group of owners approached the board about building a community garden that would be protected by the wildlife that makes gardening In Massanutten very difficult. pro ided the supplies sessment, caregivers will be contacted to discuss support services and may be invited to complete the full assessment to gather more information so that the ma or sources of stress can be identified which is being paid back via plot rental. Community volunteers along with MPOA maintenance staff built the garden, totaling 32 raised beds, and approximately 3’ x 5’ and made of concrete blocks with the original soil provided by the earlier MPOA gardener renters. More soil can be added if desired and renters are responsible for their own plot and for weeding around the plot’s pathways. MPOA provides water via water hoses and watering cans, mulch for the paths, and composted leaf soil.

Catch-Up Contributions – SECURE 2.0 increases the amount older workers can contribute to their workplace retirement plans and IRAs.

• Workplace Plans: You have to wait a couple more years, but beginning January 1, 2025, individuals aged 60 through 63 will be able to make additional catch-up contributions of $10,000 annually, indexed for in ation thereafter.

• Currently, the catch-up contribution limit is $7,500 for those aged 50 and over.

• IRAs: Starting in 2024, the current $1,000 annual catch-up contribution will be inde ed for in ation meanin it should increase gradually over time.

• Currently, the catch-up limit is $1,000, but it hasn’t changed for many years.

Student Loan Debt – Payments towards student loans may now help some workers start saving for retirement.

• Beginning in 2024, employers will have the ability to incentivize retirement savings for younger employees by “matching” some student loan payments with similar contributions on the employee’s behalf to a workplace retirement plan.

• One of the key barriers to retirement savings for recent college graduates can sometimes be a large student debt burden. This change can help alleviate this problem.

529 to Roth IRA Transfers – Individuals with excess funds in a 529 college savings plan may be eligible to roll them into a oth for the account beneficiary.

At last, milkweed began to grow in a non-rented space and the previously and addressed. TCARE is offered free of charge to family caregivers who are 60 years or older or who are caring for someone 60 years and older due to a grant from the Merck Foundation. planted zinnias have continued to reseed. The space continues to be left unrented to provide a pollinator garden and for the monarch butter ies that stop by to continue enjoying a tasty snack from the milkweed.

• Beginning in 2024, and only for 529 plans that have been maintained for at least 15 years, extra funds may be eligible to be moved directly to a Roth IRA in the beneficiary s name.

• Currently, options are more limited for extra funds remaining in a 529 plan, and generally the account owner must pay a 10% penalty (in addition to federal income taxes) to withdraw the funds, or they can name a new beneficiary that is a related family member.

This is just a sampling of SECURE 2.0’s more pertinent items for retirement accounts. The law is over 350 pages long, so there are myriad caveats and other changes.

Each new tax law brings challenges and opportunities impacting your investments, tax considerations, charitable giving strategies, and estate planning. Becoming aware of the latest developments is an essential first step to optimizing plans for your hard-earned savings.

Abe Shearer and Jennifer Shirkey are Directors with Bridgewater Retirement Community. In a separate capacity, Abe is an investment advisor of Strategent Financial, LLC. Jennifer is an attorney at Flora Pettit Attorneys at Law. The information provided is educational in nature and is not intended to be specific financial, tax, or legal advice. Readers should consult with their respective financial, tax, and legal service providers before implementing any of the options directly or indirectly referenced above.

So, get outside and activate those happy hormones by doing something enjoyable and fun. Bathe yourself in plenty of fresh air, sunshine, and nature. You will be sure to enjoy a harvest of friendship and well-being. Whatever your garden yields, well, that’s just an added bonus! It’s not just about growing food; it’s about growing community!