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New Year, New Retirement Rules

New Year, New Retirement Rules

| January 10, 2023
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We hope you had a great end to your 2022 and are feeling refreshed and ready for 2023.

We wish we were bringing you over some green smoothies and pressed juices to kick the year off. Instead, we have some new retirement rules for you.

Fun, right?

We are going to try to make this easy for you.

Let's dive in.

After months of debate, Congress finally passed some major changes to retirement laws at the end of 2022.1

The Setting Every Community Up for Retirement Enhancement (SECURE) Act 2.0 changes are numerous, complex, and will roll out over several years.

So let's focus for now on some changes for 2023:2

  1. The age at which required minimum distributions (RMDs) begin increased to 73 in 2023. This change impacts folks born between 1951 and 1959.
  2. The penalty for missing all or part of an RMD decreased to 25% in 2023. However, if you correct the past-due RMD and pay taxes on it within two years, the penalty drops to 10%.3
  3. Qualified Charitable Distributions have a few more options. Starting in 2023, folks who are aged 70½ or older can gift a one-time amount of $50,000 (adjusted for annual inflation) to a charitable remainder unitrust (CRUT), charitable remainder annuity trust (CRAT), or charitable gift annuity (CGA).4
  4. Roth savings get a boost. Starting in 2023, employers can offer workers the choice to receive vested matching contributions directly to their Roth account, where they’ll grow tax-free.2Also, Roth contributions to SIMPLE and SEP IRAs are authorized in 2023.5However, we'll have to wait for the IRS and custodians to work out procedures before folks can take advantage of these new opportunities.
  5. More people can take early distributions from their retirement accounts without penalty. Starting in 2023, victims of disasters and folks who are terminally ill will be able to access their retirement accounts early without incurring a 10% penalty.There's plenty of fine print, so let's have a conversation if you think you might be eligible.

Bottom line: There’s A LOT to unpack in the new laws. Many new rules, including changes to catch-up contributions and 529 plans, will roll out in 2024 and 2025.

As we’ve learned with previous new regulations, Congress might enact new laws, but we often have to wait for the IRS and other agencies to catch up before we can fully make use of them.

Stay tuned for more updates as the new rules shake out.

Sources:

  1. https://www.plansponsor.com/official-secure-2-0-law/
  2. https://www.fidelity.com/learning-center/personal-finance/secure-act-2
  3. https://www.kiplinger.com/retirement/new-rmd-rules
  4. https://www.fidelitycharitable.org/articles/secure-act-2-0-retirement-provisions.html
  5. https://tickertape.tdameritrade.com/retirement/secure-act-2-0-now-law-how-it-s-likely-to-change-your-retirement-planning--19304
  6. https://www.jdsupra.com/legalnews/secure-2-0-changes-rules-for-retirement-9979502/

Risk Disclosure: Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Past performance does not guarantee future results.

This material is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. The content is developed from sources believed to be providing accurate information; no warranty, expressed or implied, is made regarding accuracy, adequacy, completeness, legality, reliability, or usefulness of any information. Consult your financial professional before making any investment decision. For illustrative use only.

This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific situation with a qualified tax professional.

Important Information

Advisory services offered through Vision Capital Partners, Inc. Vision Capital Partners, Inc. is a registered investment advisor. Any discussion pertaining to taxes in this communication (including attachments) may be part of a marketing effort. As provided for in government regulations, advice (if any) related to federal taxes that is contained in this communication (including attachments) is not intended or written to be used, and cannot be used, for the purpose of avoiding penalties under the Internal Revenue Code. Individuals should seek advice based on their own circumstances from an independent tax advisor. 

All information is obtained from sources that are believed to be reliable,  but its accuracy is not guaranteed.  There is no representation or warranty as to the current accuracy, reliability, or completeness of nor liability for decisions based on the information and it should not be relied upon as such.

The information provided is for educational, illustrative, and informational purposes only and does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor's particular investment objectives, strategies, tax status, or investment horizon. You should consult your attorney or tax advisor.

The views expressed in this commentary are subject to change based on market and other conditions. 

For additional information, please visit our website at http://www.visioncapitalpartners.com/.

 

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