Secure Act 2.0: What does this mean for retirement savings? By Christine Robinette, Executive Vice President, Fragasso Financial Advisors Photography provided by: Fragasso Financial Advisors
O
n December 23rd of 2022 Congress, with bi-partisan support, passed the Secure Act 2.0. and President Biden signed it into law on December 29, 2022. This act builds onto the Secure Act of 2019 to continue to expand and incentivize retirement planning. Secure Act 2.0 does not include anything as drastic as “the death of the stretch IRA” for most non spouse beneficiaries, but it is still a mammoth bill. In fact, there are close to 100 changes included in this bill. While we will not review every rule change in this blog, we will review the most impactful to individual investors. This blog will be followed by a more in-depth dive into the company retirement plan changes included in the Secure Act 2.0.
Required Minimum Distributions (RMD) – 1. Before 2020 the RMD age began at 70 ½. Once the initial Secure Act passed, the RMD age was increased to age 72. Now three years later, the RMD age increases again. This time there are two different required minimum distribution start dates depending on when you are born. Please see the chart below: Birth Year
Age at which RMD begins
1950 or earlier
72
1951-1959
73
1960 or later
75
(701/2 for those who turned 70 1/2 proir to 2020)
Source: https://www.kitces.com
2. This act also decreases the penalty for a missed RMD from 50% of the distribution amount down to 25%. The penalty can go as low as 10% if the individual takes the missed RMD and files a corrected tax return in a timely manner. 3. Starting in the year 2024, you will no longer be required to take an RMD from an employer Roth account. This change is to align with the rules for individual Roth IRA’s as you are not required to take RMD’s. Also starting in 2024, if you had started taking required distributions from an employer Roth account you can stop taking them.
FINANCE
| 36 |
WHIRLMAGAZINE.COM
