Highlights of SECURE Act 2.0
As the clock drew to a close on 2022, the long expected passage of SECURE Act 2.0 finally occurred. SECURE Act 2.0 is the sequel to the 2019 SECURE Act, one of the most sweeping pieces of legislation related to retirement accounts ever. So what did SECURE Act 2.0 do? Here are some highlights:
Raising the starting age for Required Minimum Distributions (RMDs) from 72 to 73 and ultimately in 2033, the age for RMDs will rise to 75.
The penalty for failing to take RMDs on a timely basis is reduced from 50% of the undistributed amount to 25%.
Increased catch-up contributions. This is an increase over the normal amount you can contribute in any given year if you meet certain criteria.
Effective in 2025, automatic enrollment of employees in retirement plans is required of most major employers.
Beginning in 2024, you can roll up to $35,000 of leftover 529 education savings plan funds into a Roth IRA.
New rules for qualified charitable distributions (QCDs). Currently individuals age 70-1/2 and older can direct up to $100,000 in distributions per year from a traditional IRA to qualified 501(c)(3) charitable organizations. Beginning in 2024 the maximum contribution amount to increase based on the inflation rate.
Individuals will now have a one-time QCD they can use to fund up to $50,0000 (also indexed for inflation) into a Charitable Remainder Unit Trust (CRUT), Charitable Remainder Annuity Trust (CRAT) or a Charitable Gift Annuity (CGA).
Cleaning up some provisions related to naming a trust as a beneficiary. This is especially important when planning for individuals with disabilities.
These are just a few of the highlights of this important new law. You should talk with your financial advisor, accountant, or estate planning attorney about how you might be benefited.
This post is for informational purposes only and not for the purpose of providing legal advice. You should contact an attorney to obtain advice with respect to any particular issue or problem. Nothing herein creates an attorney-client relationship between Hallock & Hallock and the reader.