Weekend Reading: SECURE 2.0 in 2023 and Beyond
This article appears as part of Casey Weade's Weekend Reading for Retirees series. Every Friday, Casey highlights four hand-picked articles on trending retirement topics and delivers them straight to your email inbox. Get on the list here.
The beginning of 2023 brought the official signing of the Consolidated Appropriations Act, which contains SECURE 2.0. You more than likely heard the news, but what exactly does it mean for you?
READ THE ARTICLEHere’s what you should know: Included provisions bring changes to retirement plans, plans sponsors and retirement plan providers. However, while some take effect this year, others will be pushed out later. This article provides a full list of the legislation and its technicalities, but here are some high points:
In 2023:
📌 Required Minimum Distribution (RMD) age increase: As the biggest tax revenue opportunity in the bill, RMDs will now begin at age 73, then age 75 beginning in 2033.
📌 Qualifying Longevity Annuity Contracts (QLACs): The bill repeals the 25 percent of account contribution limit to QLACs; plus, allows up to $200,000 to be used from another account to purchase a QLAC.
📌 Qualified Charitable Distributions (QCDs): The non-taxable, $100,000 IRA distribution permitted to be contributed to a charitable organization is now indexed. Individuals can make a one-time qualified charitable distribution up to $50,000 to organizations not otherwise considered “charitable organizations”.
In 2024:
📌 Early withdrawal exceptions for emergencies: In the case of “‘unforeseeable’” or immediate financial needs relating to personal or family emergency expenses”, individuals can make an up to $1,000 distribution per calendar year. Withdrawals must be repaid within three years.
📌 Distributions from 529 qualified tuition accounts to Roth IRAs: Under certain conditions, the bill permits tax-free rollovers from 529 qualified tuition accounts to Roth IRAS.
Stay tuned: You may have noticed the SECURE Act did more to raise long-term tax revenue than it did to further secure retirement for the average American. 2.0 isn’t much different. However, it will offer significant planning opportunities and there is still a lack of clarity in many of its provisions that I expect to see come to light in the approaching years.