In a further attempt to expand and promote retirement savings, Congress passed SECURE Act 2.0 as part of an overall spending bill, the 2023 Consolidations and Appropriations Act. Here are just a few highlights of over 90 provisions in this Act.
Increased required minimum distributions (RMD) age secure. Act 2.0 seeks to extend the savings time frame before RMDs are required. Individuals that turn 72 in 2023 and beyond, can delay taking RMDs from their IRA until the year they turn 73. The RMD start age will move to age 75 in 2033.
Reduced penalty for missed RMD. If an RMD is not satisfied for the current year, a 50% penalty can be assessed on the amount not withdrawn. The SECURE Act 2.0 decreases that penalty to 25% on the amount not withdrawn. If the missed RMD is taken within a “correction window” the penalty is reduced to 10%. The reduction is effective immediately and is a welcome relief for what was previously a very high penalty.
Qualified charitable distribution rule changes. Qualified Charitable Distributions (QCD) are a very valuable tool for those 70 ½ and older to carry out their charitable intentions. When executed correctly, up to $100,000, then indexed for inflation going forward, can be transferred from the individual’s IRA directly to a qualified charity and the distribution is excluded from Adjusted Gross Income (AGI). There is no charitable deduction, but since the distribution is excluded from AGI, the full tax benefit of the charitable gift is achieved. This is beneficial as most retirees do not itemize their deductions. In addition, for those of RMD age, the distribution can be applied towards the annual RMD withdrawal.
Learn more about the SECURE Act 2.0 at TFCUFinancialadvisors.org or call our financial advisors at (405) 737-0006 to discuss how to incorporate these changes into your financial plan.
TFCU Financial Advisors
6501 Tinker Diagonal, MWC
(405) 737-0006
TFCUFinancialAdvisors.org
Securities are offered through RAYMOND JAMES FINANCIAL SERVICES, INC., Member FINRA/SIPC, and are not insured by NCUA or insured by any other government agency. Funds are NOT GUARANTEED nor are they deposits or obligations of the credit union or any affiliated entity of the credit union, and are subject to risk, including the possible loss of principal. Tinker Federal Credit Union, Tinker Financial Services, LLC and TFCU Financial Advisors* are not registered broker/dealers and are independent of Raymond James Financial Services, Inc. Investment advisory services are offered through Raymond James Financial Services Advisors, Inc., a non-affiliated third party provider to Tinker Financial Services, LLC and Tinker Federal Credit Union. All investments and information are intended for U.S. residents only. *TFCU Financial Advisors is a registered trademark and ‘dba’ of Tinker Financial Services, LLC.
The content provided herein is based on an interpretation by Raymond James of the SECURE Act 2.0 and is not intended to be legal advice or provide a tax opinion. Please discuss these matters with the appropriate professional. This document is a summary only and not meant to represent all provisions within the SECURE Act 2.0.