Washington Follies

| January 06, 2023

Once again, Congress has rewritten the retirement-plan rules between Christmas and New Year’s Eve. I am sure that this is only done with the well-being of the American people in mind, that no favors were exchanged, and that nobody’s child got a job at a bank or insurance company. We can have faith that the giant firms spent all their lobbying dollars out of an intense sense of duty to the nation.

Still, anything this big will always have something worthwhile in it and SECURE 2.0 seems to be no different.

Key provisions of SECURE 2.0 with January 2023 effective dates include:*

▪ The age at which owners of retirement accounts must start taking RMDs will increase to 73, starting January 1, 2023. The current age to begin taking RMDs is 72, so individuals will have an additional year to delay taking a mandatory withdrawal of deferred savings from their retirement accounts. (Note: Retirement account owners that turned 72 in 2022 or earlier will need to continue taking RMDs as scheduled. If you are turning 72 in 2023 and have already scheduled a withdrawal, please call us). The RMD Beginning Age changes to 75 in 2033.

▪ The penalty for failing to take an RMD will decrease to 25% of the RMD amount, from 50% currently, and 10% if corrected in a timely manner for IRAs.

Additional provisions of SECURE 2.0 include:

▪ Increased Catch-Up and Contribution limits for IRA, 401(k) and SIMPLE plans which are effective for tax years after December 31, 2024.

▪ Allows for rollovers for certain qualifying distributions from 529 accounts to a Roth IRA or other types of retirement plans, which is effective for distributions after December 31, 2023.

 Anthony has already signed up to take continuing education classes on the subject and we will update you when we are reasonably certain about the rules. Keep in mind that the Internal Revenue Service has still not finalized the distribution rules from the first SECURE Act passed after Christmas in 2019.