The SECURE Act 2.0, enacted in late 2022, has dozens of provisions intended to encourage more people to save for retirement in workplace plans and IRAs, help grow retirement savings, and urge small employers to offer retirement plans. Some of the provisions went into effect in 2023. Others start in 2024, 2025, 2026, and 2027.
It’s important to remember that regulations can change without notice, and there is no guarantee that the treatment of certain rules will remain the same in 2024 and beyond.1
Below are the most significant SECURE 2.0 provisions that go into effect this year:2,3
There are nuances and complexities to these rule and regulation changes and how each could impact your retirement preparedness, tax considerations, estate strategies, or college savings.
If you have any questions or would like to discuss how these changes may affect you, please reach out to schedule a meeting with our team. We’d welcome the opportunity to translate how broader policy shifts may impact your financial strategy or to provide a second opinion regarding your overall approach.
1. This article is for informational purposes only and is not a replacement for real-life advice. Consult your tax, legal, and accounting professionals before modifying your tax strategy.
To qualify for the tax-free and penalty-free withdrawal of earnings, Roth IRA distributions must meet a five-year holding requirement and occur after age 59½. Tax- and penalty-free withdrawals can also be taken under certain other circumstances, such as the owner’s death. The original Roth IRA owner is not required to make minimum annual withdrawals.
Once you reach age 73, you must begin taking RMDs from a traditional IRA in most circumstances. Withdrawals from traditional IRAs are taxed as ordinary income and, if taken before age 59½, may be subject to a 10% federal income tax penalty.
At age 73, you must take the RMDs from your 401(k) or any other defined contribution plan in most circumstances. Withdrawals from your 401(k) or any other defined contribution plans are taxed as ordinary income and, if taken before age 59½, may be subject to a 10% federal income tax penalty.
A 529 plan is a college savings plan that allows individuals to save for college on a tax-advantaged basis. The state tax treatment of 529 plans is only one factor to consider before committing to a savings plan. Also, consider any fees and expenses associated with a particular plan. Whether or not a state tax deduction is available will depend on your state of residence. State tax laws and treatment may vary. State tax laws may differ from federal tax laws. Earnings on nonqualified distributions will be subject to income tax and a 10% federal penalty tax.
Like a traditional IRA, withdrawals from SIMPLE IRAs are taxed as ordinary income and, if taken before age 59½, may be subject to a 10% federal income tax penalty. In most circumstances, once you reach age 73, you must take the required minimum distributions.
This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm.