That’s right folks, our elected officials got something done in 2022 that has bearing on your everyday life. The passage of the SECURE Act 2.0 brings up some interesting planning opportunities for your finances.
Since the name of my blog game is short-and-sweet, I’ll just hit a few highlights. Click on the article below for a more in-depth look.
- Required Minimum Distributions have been pushed out AGAIN.Now you don’t have to start taking money from your tax-deferred accounts until the year you turn 73. Also, the penalties for not taking the RMD have gone down from 50% to 25% of the amount that should have been taken. In some cases, if you really try to fix the error quickly, the penalty can be reduced to 10%.
- Catch-Up Contributions into retirement accounts for those aged 60-63 will increase to $10,000/year starting in 2025.Currently the catch-up contribution for employer sponsored plans is $7,500 for anyone aged 50 and over.
- Roth 401(k) contributions can now be matched by your employer in Roth-designated.This is awesome! Before, your Roth contribution was matched in the tax-deferred bucket. The hitch: it will require you employer to amend their plan before you can use the new law to your benefit. In 2020 there were about 600,000 retirement plans in the US, so I’m sure this implementation will be fast and easy. 😊
- Student loan payments will be able to be matched in a retirement account by employer money (again if the employer elects to do so) starting in 2024.
- Leftover 529 money can be converted to Roth IRAs for young adults.
Stay tuned for more details on the college-to-Roth savings provision next week’s blog post.
