420 North Evergreen Road,
Written by: Core Financial Group
After many months of negotiation and review the long awaited Enhanced American Retirement Now Act of 2022, commonly called the Secure 2.0 Act of 2022 was passed. This was part of a massive 4000-page bill passed on December 23, 2022. The following are a few of the provisions that will have an effect on you and your retirement savings.
Required Minimum Distributions (RMD)
· RMD start date to increase to age 75 over 10 years
· Starting in 2023 increase to age 73
· For those turning 74 after 2032 RMD must start at age 75
· Early withdrawal without any penalty due to any Federal declared disaster. Historically each disaster required separate new legislation.
· After enactment penalty fee withdrawal permitted for one who is diagnosed with terminal illness.
· Penalty free withdrawal allowed for victims of domestic abuve up to the lower of $10,000 or 50% of account.
· Early withdrawal available to Public Safety Officers after age 50 or who have 25 years of service.
Catch up Limits and Contributions
· Starting in 2025 an additional increase in the catch-up limit of $10,000 for those age 60,61,62 or 63, (simple plans $5,000 limit)
· After 2023 IRA catch-up for those older than age 50 will have the limits increased for inflation.
· After 2023 all catch-up contributions are subject to Roth (i.e., after-tax) rules, rather than only where allowed by plan.
· Employers can make non-elective contributions to Simple IRAs or Simple 401(k)s up to 10% of compensation.
· For plan years after 2023 employers may make payments to qualified plans that match student loan payments by employees.
We know everyone’s situation is different when it comes to retirement savings. Should you or someone you know have questions about this or anything else related to their financial situation please reach out. We are happy to help!