The year is flying by, and before we know it, 2025 will be here. With the arrival of the new year, several new provisions from the 2022 SECURE 2.0 law that impact retirement plans will become effective. One of the changes allows certain older participants in company savings plans and SIMPLE IRAs to make higher catch-up contributions.
A recent report by the Investment Company Institute revealed that U.S. retirement assets climbed to a staggering $40 trillion as of the end of the second quarter. This growth was led by an increase in IRA assets to $14.5 trillion. In addition, a good chunk of the remainder of the $40 trillion is sitting in 401(k) and other company plans, most of which will eventually end up in IRAs.
Taxpayers with the largest IRAs (and their beneficiaries) will be in higher tax brackets in the future. Doing nothing now is a bad plan. Tax-deferred traditional IRAs will continue to grow, and so will the tax bill that eventually comes due. The SECURE Act is a giant wake-up call to do the long-term thinking that should have been done since the beginning.
The IRS has released almost 300 pages of regulations on required minimum distributions (RMDs) for IRAs and 401(k)s, in two parts. The first part was the FINAL Secure Act Regulations-7-18-24.pdf which ran 260 pages. The second part was the Proposed SECURE 2.0 Regualtions-7-18-24.pdf which ran another 36 pages.
There is confusion over RMD rules and advisors must step up to the plate to help clients. The penalty for missing a required minimum distribution (RMD) is one of the largest in the Tax Code. For years it was 50 percent of the amount that should have been taken but was not.
We all had a deal with the taxman, and Congress just reneged. Why? Because, as usual, the government needed money. When Congress passed the SECURE Act on Dec. 20, 2019, we lost out on the three-part deal that many retirees and their beneficiaries had been banking on, literally.
There’s a chance to do two 529-to-Roth rollovers this year – but only if the first one (for 2023) is done by April 15.
Here are tactics to use this year given the opportunities for record stock values at the end of 2023.
The Roth IRA is the ultimate financial gift for retirees and their beneficiaries. Roth individual retirement accounts have no lifetime required minimum distributions, so you’ll never have to worry about paying higher future tax rates on those funds.
IRS released Notice 2023-62 on Friday giving employer retirement plans two additional years to comply with the controversial rule requiring that catch-up contributions for employees age 50 or over whose wages for the prior year exceeded $145,000 be made on a Roth basis.
