As you may know, Congress passed SECURE 2.0 as part of the fiscal 2023 spending package. This bipartisan retirement security legislation could present opportunities for your retirement savings strategy. I have attached a brief overview that highlights some of the key changes, as well as some additional detail regarding the specific provisions.
One of the biggest changes in this act, that will affect a majority of our clients, is that to the Required Minimum Distributions (RMDs)
- Before 2020 the RMD age began at 70 1/2. 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 were born. Please see the chart below:
BIRTH YEAR AGE AT WHICH RMD BEGINS
1950 or earlier 72 (701/2 for those who turned 70 1/2 prior to 2020)
1951 - 1959 73
1960 or later 75
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 a RMD from an employer ROTH IRA 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 IRA account you can stop taking them.
If at any time, you have any questions or would like more information about the SECURE ACT 2.0 and how it may impact your retirement savings, please give our office a call at 724-942-3300 to set up a meeting.