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SECURE 2.0: Ten Key Provisions For Your Retirement Planning

SECURE 2.0: Ten Key Provisions For Your Retirement Planning

In late December 2022, Congress passed a massive budget bill that the President signed on December 29th.

Buried in that bill was the Setting Every Community Up for Retirement Enhancement 2.0 Act of 2022 (SECURE 2.0).

10 Key Items You Should Know About the SECURE 2.0 Act:

1. After 2023, beneficiaries of 529 accounts may make up to $35,000 in rollovers to their Roth IRA without tax or penalty. The 529 must have been open for at least 15 years, and the rollover is limited to the amount contributed (and earnings) more than five years earlier.

2. The Required Minimum Distribution (RMD) beginning age moves from 72 to 73 for those who turn 72 after 2022, and to age 75 for those turning 74 in 2032.

3. The elective deferral catch-up contribution limit for older employees will increase in 2025 to the greater of $10,000 or 50% more than the regular catch-up amount in 2024 (2025 for SIMPLE plans).

4. After 2023, there will be some added exceptions to the 10% early distribution penalty, such as:

  1. For $1,000 of emergency expenses
  2. For the lesser of $10,000 or 50% of the account related to domestic abuse issues
  3. Beginning 12/29/25 for up to $2,500 per year for payment of premiums for long-term care insurance contracts
  4. Retroactive for disasters after 1/25/21, $22,000 - and the income will be taken into account over three years

5. After 2023, a surviving spouse beneficiary of an employee in an employer retirement account may elect to be treated as if they were the employee for RMD and lifetime distribution rules if RMDs haven’t started.

6. For plan years after 2023, employers can make matching contributions for an employee’s “qualified student loan payments” to assist those burdened by student debt and not actively contributing to a matching-employer plan.

7. After 2023, RMDs for Roth accounts in qualified employer plans are eliminated.

8. SIMPLE and SEP IRAs starting in 2023 allow for ROTH contributions.

9. Starting in 2024, “high-wage earners” will be required to use the Roth option for catch-up contributions.

10. There is a one-time opportunity to use your qualified charitable distribution (QCD) to fund a split-interest entity such as a charitable trust. This may not make economic sense for a charitable remainder unitrust (CRUT) or charitable remainder annuity trust (CRAT) but may make sense for a charitable gift annuity trust.

There is more, so connect with SVA to discuss or learn about SECURE 2.0.

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Biz Tip Topic Expert: Richard Kollauf - JD, CPA, CFP, AEP

Richard Kollauf - JD, CPA, CFP, AEP

Richard is a Principal for SVA Certified Public Accountants and has more than 35 years of experience working in financial, accounting, and legal operations. Richard’s expertise in the multi-faceted financial environment includes business succession planning, tax, investments, finance, mergers and acquisitions, estate planning, and trust administration. He also has experience in estate planning and distribution for complex operational and investment multi-state businesses. Richard provides income tax consulting services to closely-held and family-owned businesses, as well as high net worth individuals.

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