Zenith Wealth Partners

SECURE Act 2.0 (2023 Changes Inside)

While many of us took time to rest and spend quality time with loved ones, Congress finally passed some major changes to retirement laws at the end of 2022. The Setting Every Community Up for Retirement Enhancement (SECUREAct 2.0 changes are numerous, complex, and will roll out over several years.
So let’s focus for now on some changes for 2023 and future changes that could be relevant for you:
  1. The age at which Required minimum distributions (RMDs) from retirement accounts will begin will increase from age 72 to 73. This will start in 2023 and impacts individuals born between 1951 and 1959.
  2. Taxpayers will have two new opportunities for Roth contributions – SIMPLE Roth IRA and SEP Roth IRA. Previously, SIMPLE and SEP plans could only include pre-tax funds. It will likely take some time before employers, custodians, and the IRS are able to implement the procedures and policies necessary to actually effectuate such contributions.4
  3. Your Roth savings is getting a boost! Starting in 2024, employers can offer workers the choice to receive matching contributions directly to the Roth portion of their retirement account, where it will grow tax-free. If you make this election, the matching contributions will be treated as taxable income for you in the year they are made. Additionally, these Roth-matching contributions will be immediately vested.
  4. Expanded the list of exceptions to the 10% penalty for distributions from retirement accounts before age 59.5. Starting in 2023, victims of disasters, victims of domestic violence, individuals who are 50 with over 25 years of service for an employer, and individuals 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.
  5. New program to help employees pay down student loans. Starting in 2024, employers may design a plan to allow student loan payments to be treated as elective deferrals for purposes of matching contributions. Instead of contributing to a 401(k), 403(b), or SIMPLE IRA plan, employees can make contributions to pay off student loans. Employees will be eligible to receive an employer match (and will remain on the same vesting schedule as if they were contributing to a retirement plan) on eligible student loan repayments.
  6. Transfers from a 529 account to a Roth IRA are allowed after 15 years. Starting in 2024, the annual limit for how much can be moved from a 529 plan to a Roth IRA is the IRA contribution limit for the year. However, the transfer will not be subject to the same income limitations as ‘regular’ Roth IRA contributions; and the maximum amount that can be moved from a 529 plan to a Roth IRA during an individual’s lifetime is $35,000.
  7. Solo 401k plans can be established up until the tax filing deadline. Starting in 2024, you will not need to rush to get your Solo 401k plan open before year end!
Bottom Line: There’s A LOT to unpack in the new law.
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.

Do you have any questions right now? If so, click here to schedule a time to connect with our team!

All written content is for information purposes only. Opinions expressed herein are solely those of Zenith, unless otherwise specifically cited. Material presented is believed to be from reliable sources and no representations are made by our firm as to another parties’ informational accuracy or completeness. All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation.

Tags :
Share This :

Leave a Reply

Your email address will not be published. Required fields are marked *

Get Exclusive Insights

Stay up-to-date with all the latest from Zenith Wealth Partners, sign up for our newsletter and be the first to know!