Ask Dana! A Column Where Personal Finance and Life Intersect

Ask Dana! A Column Where Personal Finance and Life Intersect

New rules for your retirement wellness! A new law was passed on December 29, 2022, called the Secure Act 2.0. The Secure (Setting Every Community Up for Retirement Enhancement) ACT 2.0 added over 92 new retirement plan provisions that will roll out over the course of the coming years. Below is a concise list of a few changes to be aware of for individuals:

  1. Increase in age for required mandatory distributions (RMDs). This is when the IRS requires that you draw out (and pay taxes on) a minimum amount of retirement funds. This used to be 70.5 years old, then 72, but has increased to age 73 beginning in 2023 and age 75 beginning in 2033.
  2. Penalty for failure to take RMD is reduced from 50% to 25%, potentially down to only 10%. This is good news for anyone who makes a mistake!
  3. Higher catch-up contribution limits. This means you may be able to SAVE MORE in your retirement plans.
  4. Student loan matching retirement contributions. Section 110 permits an employer to make matching contributions under a 401(k) plan, 403(b) plan, or SIMPLE IRA with respect to qualified student loan payments.
  5. The Saver’s Match, an incentive to save for retirement for lower-income individuals, is updated beginning on 12/31/2026.
  6. Savings “Lost and Found.” Yippie! There will be federal assistance to states in locating owners of matured and unredeemed savings bonds. For retirement savers, the Department of Labor will create a database within two years to assist those who may have lost track of their retirement savings accounts that were held at former employers.
  7. 529 to Roth IRA transfer. This is AWESOME and has financial advisors and planners like myself rejoicing. It is not effective until 12/31/2023 and has a number of limitations, but is still exciting for savers. Some considerations:
    • There is a $35,000 lifetime cap
    • The rollover is subject to annual Roth IRA contribution limit ($6,500 in 2023) and can only be made to the beneficiary of the 529, not the account owner (parent)
    • The account must have been open for at least 15 years
    • The account holder cannot roll over contributions or earnings on those contributions made in the last 5 years
  8. Qualified Charitable Distributions (QCDs) from IRAs. QCDs are for those over 70.5. There is an added opportunity to make a one-time $50,000 distribution to a Charitable Remainder Trust (CRUT), Charitable Annuity Trust (CRAT), or a Charitable Gift Annuity.
  9. Elimination of 10% penalty on early withdrawals from retirement accounts for certain persons or circumstances, effective 12/31/2023. Check with your custodian or plan provider for more information.

The above list represents only a portion of the changes included in the Secure Act 2.0. There are many more provisions that will impact small businesses and retirement plan sponsors as well. You can find summaries of these relatively easily if you search online—and as always, you can also reach out to us or visit www.TrinityPointWealth.com.

Dana R. Mascalo, CFP®, RLP®, AAMS®, C(k)P®, is a Managing Partner with TrinityPoint Wealth, an independent SEC Registered Investment Advisory firm in Milford, CT and Charlotte, NC. Dana advises high net worth clients with complex needs and is sought after by individuals, families, business owners and executives all over CT and the United States. Acting as their personal CFO, Dana looks at a client’s entire financial life with a visionary lens, advising on investment portfolios, retirement planning, stock options, life transitions, exit planning for business owners, customized advanced cash-flow planning and multi-generational wealth transfer strategies.

This material presented is for informational purposes only and is not intended to serve as a substitute for personalized investment advice or as a recommendation or solicitation of any particular security, strategy, or investment product. TrinityPoint Wealth, nor its investment advisory representatives are permitted to provide legal or tax advice, and nothing contained in these materials should be taken as legal or tax advice.