For those of you focused on celebrating the Holidays at the end of 2022 and less on the happenings in Washington DC, good on you! You have your priorities straight. The rest of us are still trying to digest the passing of the Setting Every Community Up for Retirement Enhancement 2.0 Act (SECURE). The bill was signed by President Biden on December 29th and includes a bevy of changes to the retirement landscape.
In 2019, the original SECURE Act pushed back the age at which those with qualified retirement accounts must begin Required Minimum Distributions (RMDs) from 70.5 years of age to 72 years of age. SECURE Act 2.0 pushes back the date further. In short, the new law allows those born between 1951 and 1959 to start RMDs at age 73. And those born in 1960 or later do not have to start RMDs until age 75. Those born in 1950 or earlier must start RMDs at age 72, or 70.5 years of age.
For those of you that are charitably minded, SECURE 2.0 does not change the age at which Qualified Charitable contributions can begin, which is 70.5 years of age. In some cases, giving pre-tax dollars and cents to charity will reduce taxable income.
Delaying RMDs could also expand the window for Roth Conversions, allowing for up to 3 more years of conversion at a lower rate than may be paid after RMDs kick in.
Finally, SECURE 2.0 eliminates RMDs for employer plan Roth Accounts (e.g. Roth 401(k), Roth 403(b), etc.) starting in 2024. When phased in, these accounts will be treated like Roth IRAs in that they won’t be subject to RMDs.
More to come on SECURE 2.0 in the near future.