The Secure Act 2.0 and how it helps savers and investors.
With the New Year, The Secure Act 2.0 and its 4,100 pages became part of the $1.7 trillion spending bill and is now law. It builds on the Secure Act of 2019 and intends to increase retirement savings and access to 401(k) and individual retirement accounts and savings.
While it is a lengthy document, it is nice to know that the retirement savings world has widely praised it. There are over 90 provisions that come from it, but here are just a few areas to discuss at your next planning meeting:
- You can delay taking income from IRAs. The age to start taking Required Minimum Distributions (RMDs) increases to age 73 in 2023 and 75 in 2033.
- For those who can afford to wait, this gives more time to do Roth conversions.
- Increased retirement savings are encouraged with higher catch-up contribution allowances.
- For individual IRA/Roth IRAs in 2024, investors age 50+ can contribute an additional $1,000, which will be indexed for inflation.
- Depending on the workplace retirement plan, effective in 2025, those aged 60-63 will have even higher catch-up contribution limits than those between 50-59.
- Qualified Charitable Distributions (QCD’s) cap of $100,000 is now indexed for inflation.
- There is now a one-time provision to direct $50,000 towards a new split-interest entity such as a Charitable Remainder Unitrust (CRUT) and others.
- QCDs are not includable in income now and are not just for taxpayers who itemize.
- Overfunded 529 College Savings Plan options are enhanced.
- Unused 529 funds may be transferred directly to a Roth IRA for the beneficiary.
The Secure Act 2.0 has many avenues and details to explore. I encourage you to talk with your advisor to look for and plan specific opportunities.
The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of Mainspring Wealth Advisors and not necessarily those of Raymond James.
