Thoughts on SECURE ACT 2.0

Secure Act passed in the last budget act of 2022. While the first SECURE ACT had sweeping changes that impacted current retirement planning, SECURE ACT 2.0 has less immediate changes and more long-term planning implications.

The big take aways are:

Starting January 1, 2023, the Required Minimum Distribution (RMD) age for retirement funds is increased to 73 years old. Starting January 1, 2033, the new RMD age is 75!
If you have a small business, please set up a time to meet with Ratio and your accountant to ensure your 401(K) plan is following the new changes. (Important changes include automatic enrollment for employees, student loan payments that count as 401(K) deferrals, small business pension plan startup costs eligible for a larger credit.)
If you have a 529 plan with assets left over in it, you can move money to a Roth for your child. Beneficiaries are allowed to roll up to $35,000 over the course of their lifetime from a 529 plan to a Roth IRA (The 529 plan must be open for more than 15 years and is subject to Roth contribution limits).
In 2025, the catch-up provision for 401(K)s will start to increase with inflation.
There are also changes to the amount of money you can save into your 401(K) and IRAs for 2023.

Elective Deferral for 401(K), 403(B), 457	$22,500
Catch up for people over 50 years old	$7,500
Total Elective Deferral for people over 50 years old	$30,000
IRA or Roth IRA Contribution Limit	$6,500
Catch up for people over 50 years old	$1,000

Remember to check your 401(K), IRA deferrals and double check your beneficiaries.

And one more change for 2023, the annual gift tax exclusion increased from $16,000 to $17,000.

Disclosure

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