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January 04, 2023 | Financial Planning
Signed into law just over three years ago, the original SECURE Act ushered in significant changes for Americans looking to boost their retirement savings. As those changes took effect, many policymakers were already busy creating their SECURE Act ‘2.0’ wish lists – and fast forward to 2023, just in time for the new year, many of those wishes were granted with the passing of the $1.7 trillion omnibus spending bill.
Here are key highlights:
Required Minimum Distribution (RMD) age set to increase again. The increases will follow this schedule:
For those who can afford to delay RMDs, proactive tax planning and income smoothing will play a key role in minimizing lifetime taxes.
Increased catch-up contributions... with a catch. Beginning in 2025, catch-up contribution limits for individuals between the ages of 60 and 63 will increase to:
Both of these limits, including the $1,000 IRA catch-up limit, will now be indexed for inflation. The catch is that, beginning in 2024, those making over $145,000 per year can only make Roth catch-up contributions to their employer plan (excluding IRA catch-up).
A few new twists for Roth accounts. These accounts have really been having their day in the sun the last few years and the following changes will make them even more appealing:
The popularity of 529 Plans have been on the rise recently, especially with the new FAFSA rules around non-parent owned 529 Plans and their usefulness in estate planning, making now a perfect time to give them a second look for yourself and others.
Qualified Charitable Distributions (QCDs) get a facelift. There are two significant changes for QCDs:
Note: QCDs can be made after age 70 ½ and count towards annual RMDs. However, QCDs cannot be made to Donor Advised Funds or certain charities.
More opportunities for employees to save for retirement. Like the original SECURE Act, this bill’s primary goal is to expand access to retirement accounts for all Americans no matter their situation.
Significantly expands emergency access to retirement savings.
Creates new incentives for businesses.
And for good measure, a few other changes we felt important to note.
As the rules continue to change and evolve around saving for retirement, we are here to help you make sense of it all.
We're always available if you'd like to schedule a call with a member of our team to talk about the current environment, solutions we offer, or other questions top of mind for you.
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