Personal Wealth Management / Expert Commentary

Fisher Investments Details Notable Changes Made in the Secure Act 2.0

At the end of 2022, Congress enacted the Setting Every Community Up for Retirement Enhancement (SECURE) Act 2.0. It contains a number of provisions that impact retirement planning. Some of the most notable changes are outlined in the tables below.

If you have questions about how this may impact you, please contact Fisher Investments today. Fisher Investments can work with you to understand your unique financial situation and investment goals and build an easy-to-understand, comprehensive retirement plan tailored to you.

Requred Minimum Distribution (RMD) Provisions

RMD Age

The age at which you’re required to take RMDs from IRAs, 401(k)s, and other retirement plans has been increased to 73 in 2023; in 2033, the age will be further increased to 75.

Roth Plans

Starting in 2024, RMDs will be eliminated for employer Roth plans, bringing them into line with Roth IRAs.

Penalties

As of 2023 the penalty for failing to take RMDs was reduced to 25%, and in some cases, 10%, from the previous 50%.


IRA Provisions

Surviving Spouses

  • Beginning in 2024, surviving spouse IRA beneficiaries will have the option to elect to be treated the same as the deceased spouse, rather than performing a rollover or treating the inherited IRA as their own plan.
  • This could delay RMDs for the surviving spouse until the deceased spouse would have reached RMD age.
  • If the surviving spouse dies before RMDs begin, their beneficiaries will be entitled to lifetime “stretch” distributions, instead of being stuck with the 10-Year Rule that would otherwise apply.

Catch-Up Contributions

The current $1,000 catch-up contribution limit for IRAs will be indexed to inflation starting in 2025.

Employer Match

Employers are now permitted to deposit matching contributions into employees’ designated Roth accounts. These amounts will be included in the employee’s income in the year of contribution.


401(k) Provisions

Catch-Up Contributions

  • Effective starting in 2025, employer retirement plan catch-up contribution limits for workers that are age 60 to 63 will be increased to at least $11,250. These increased limits will be indexed to inflation.
  • For individuals with more than $145,000 per year in annual wages, catch-up contributions made to 401(k) plans starting in 2024 must be contributed into a Roth account.

Employers

  • Employers can match employees’ qualifying student-loan payments with contributions to the employees’ 401(k) retirement accounts starting in 2024.
  • Effective in 2024, Employers will be able to automatically enroll certain employees (those who make up to $150,000 in 2023) in emergency savings accounts within 401(k) plans. This allows those employees to save up to $2,500 in a rainy-day Roth account. These contributions would be eligible for employer match and funds would be available free of taxes and penalties.

Other Provisions

Qualified Charitable Distributions (QCDs)

  • Starting in 2024, the $100,000 QCD limit will be indexed to inflation.
  • QCDs can now be used to fund one-time gifts of up to $50,000 to a charitable trust or gift annuity.

529 College Savings Plans

  • For 529 accounts that have been open at least 15 years, the beneficiary can roll over up to a lifetime limit of $35,000 into a Roth IRA in their name starting in 2024. These rollovers would be subject to Roth IRA annual contribution limits.
    • The beneficiary must have earned income equal to or greater than the amount transferred to the Roth in the same year.
    • Only contributions made more than 5 years ago are eligible to transfer.

Accessing Retirement Funds Early

  • Starting in 2024, individuals under age 59 ½ may withdraw up to $1,000 per year from their retirement plan for certain emergencies without paying the 10% early withdrawal tax, with an option to put the money back into their accounts within three years. No further emergency withdrawal is permitted during that three-year period unless the money is first paid back.
  • Starting in 2026, up to $2,500 annually can be distributed before age 59 ½ to cover premiums for long-term care insurance.

ABLE Accounts

In 2026, ABLE accounts will be permitted for individuals who became disabled before the age of 46, versus the current age of 25.


Next Steps – Contact Fisher Investments Today

You may already have help with your financial plan, and that’s fine. But, if you’re looking for a second opinion or a more comprehensive approach to achieving your financial goals, Fisher Investments can help. Fisher Investments is a world-class money manager who doesn’t sell investment products for a commission. Fisher Investments has helped thousands of investors—each with their own specific time horizons, growth objectives and income needs—work towards their long-term goals. Through our holistic wealth management services, you can benefit from Fisher Investments’ expertise and over 40 years of industry experience. Contact us today to find out more about how Fisher Investments may be able to help you reach your long-term financial goals.

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