The SECURE 2.0 Act of 2022 was signed into law December 29, 2022 and it adds many new retirement plan provisions. Some are minor and offer little change and some of the changes don’t take effect for 10 years. There are however, a few changes that we think everyone should know about now.
Required Minimum Distributions (RMDs) are changing. Again. For the benefit of savers. Beginning in 2023 the age to begin taking RMDs will change to the year you turn 73. If you already turned 72 in 2022 you will need to keep taking RMDs. If you turn 72 in 2023 and already planned withdrawals for 2023 you may want to reconsider that. Another programmed increase to age 75 was written into the law but that doesn’t take effect until 2033.
Another fantastic change is exempting Roth balances in employer plans from RMDs. Prior to this law being passed, RMDs were required on Roth balances in employer plans but not in Roth IRAs. That will end in 2024 so the no brainer decision to get Roth money out of employer plans at retirement isn’t such a no brainer anymore and will likely play a role in reducing over all fees for retirees by offering the option of leaving their Roth money in their employer plan.
Most of the other changes either take effect several years from now (and therefore could be repealed) or affect a small number of individual situations such as allowing employers to match with Roth money, match on student loan repayment and increased catch up contributions. If you have questions on how these changes affect your situation, please reach out to one of our advisors for help.