WORTH THE READ
Secure 2.0: Retirement Savings Legislation
January 2, 2023 - 2 MINUTE READ
President Biden is expected to sign the Secure 2.0 Act in the coming weeks, providing a slate of changes that could help strengthen the retirement system. The bill builds on previous legislation that increased the age at which retirees take required minimum distributions (RMDS), along with dozens of other provisions. Additional changes are designed to help younger workers continue saving while paying off student debt and making it easier to transfer accounts from employer to employer.
For people in or near retirement, the age of which owners of retirement accounts must start taking RMDS will increase from age 72 to 73.1 Individuals will have an additional year to delay taking these mandatory withdrawals from their qualified accounts. One thing to note is if you turned 72 in 2022 or earlier, you will continue to take RMDS as scheduled. The Secure 2.0 Act will also push the age at which RMDS must start to 75 in 2033.1 Another change in 2023 will reduce the penalty of failing to take RMDS from 50% to 25% of the amount not taken.
For those who are nearing retirement, starting January 1, 2025, individuals ages 60 through 63 can make catch-up contributions up to $10,000 annually to their employer's plan. 1The current catch-up amount for those age 50 and older in 2023 is $7,500. A caveat to note is that if you earn more than $145,000 in the prior calendar year, all catch-up contributions will need to be made to a Roth account. Lastly, beginning in 2023 those who are age 70 ½ and older may elect part of their QCD in a one-time gift up to $50,000.1 This amount is adjusted annually for inflation with the funds going to a charitable remainder unitrust, a charitable remainder annuity trust, or a charitable gift annuity.