Learn How the Recent Secure Act 2.0 Changes May Impact Your Retirement Planning!

IRA Required Minimum Distribution (RMD) Changes:

  • Effective January 1, 2023:
      • Born in 1950 or earlier: No changes.
      • Born in 1951 – 1959: RMDs start at age 73.
      • Born in 1960 or later: RMDs start at age 75.
  • Effective January 1, 2023: The penalty for failing to take an RMD decreased from 50% to 25%.
      • The penalty is only 10% for IRAs if the mistake is corrected in a timely manner.
  • Effective January 1, 2024: Designated Roth accounts in employer-sponsored plans are generally no longer subject to pre-death required minimum distribution requirements.

401(k) and 403(b) Changes:

  • Effective January 1, 2024:
      • Employers will be able to provide employees the option of receiving vested matching contributions to Roth accounts.
      • Certain higher-income participants’ catch-up contributions for those aged 50 or older and earning more than $145,000 the prior calendar year may need to be made to a Roth account (in after-tax dollars).
      • The $1,000 catch-up contribution limit for individuals age 50 and over will be indexed to inflation.
  • Effective January 1, 2025:
      • Individuals ages 60-63 will be able to make catch-up contributions up to $10,000 annually to a 401(k) or other employer-sponsored plan.
      • Requires businesses adopting new 401(k) and 403(b) plans to automatically enroll eligible employees, starting at a contribution rate of at least 3%.
      • Permits retirement plan service providers to offer plan sponsors automatic portability services, transferring an employee’s low balance retirement accounts to a new plan when they change jobs.

Other Important Notes:

  • Effective January 1, 2024: Employer retirement plans can treat qualified student loan payments as elective deferrals for matching purposes.
  • Effective January 1, 2024: 529-to-Roth IRA transfers can be made tax and penalty-free for the same beneficiary if:
      • The 529 account has been open for 15 years or more.
      • The amount does not exceed annual Roth IRA limits, or a lifetime maximum of $35,000. 

*Consult with a qualified professional regarding your specific situation, as other factors, limitations, and alternatives may impact eligibility or suitability.

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Disclosures: Information contained herein is intended for informational, illustrative and/or educational use only and not designed to be a recommendation for any specific investment product, strategy, plan feature or other purpose nor shall it be construed to be the provision of individualized investment, tax or legal advice. Endowment Wealth Management, Inc. (“EWM”) is not soliciting or recommending any action based on this material. This is neither an offer nor a solicitation to buy/or sell securities in any state or jurisdiction where EWM is not registered, or notice filed and does not qualify for an exemption from such registration and notice filing requirements. Prior to making any investment or financial decisions, an investor should seek individualized advice from a personal financial, legal, tax and other professional advisors that consider all of the particular facts and circumstances of the investor’s own situation. All investments involve risk and potential loss of capital and, unless otherwise stated, are not insured or guaranteed.

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The information presented is a general summary of selected provisions of SECURE Act 2.0 and is provided for educational and illustrative purposes only. Retirement-plan rules, tax laws, IRS guidance, and plan-specific provisions may change over time and may affect how these rules apply to individual investors. Not all provisions apply to every retirement plan or participant, and some provisions may require employer adoption before becoming available. This material should not be construed as individualized tax, legal, or investment advice. Individuals should consult their financial advisor, tax professional, attorney, plan administrator, or other qualified professionals regarding their specific circumstances.

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