In our December 28 and January 2 Slott Report articles, we focused mostly on the provisions of the new SECURE 2.0 law that apply to IRAs. But many of the law’s changes are directed towards workplace plans, such as 401(k)s.
Here’s a rundown of the most important plan changes:
As you may have read, Congress is considering passage of a $1.65 trillion spending bill that contains a number of retirement savings plan provisions. As of this morning (December 21), the bill has not been passed, and both houses of Congress only have until this Friday (December 23) to do so. If passed, President Biden is expected to sign the bill immediately.
Question:
Do adult children who inherited a parent’s Roth IRA in 2020 need to take an RMD each year during the 10-year payout rule or may they leave it alone and deplete the account at the end of the 10th year? I’ve heard it both ways and would like to know which is correct.
Thank you.
Pam
The IRS has announced the retirement contribution limits for 2023. Because many of these limits are tied to inflation, it shouldn’t come as a surprise that some of the limits had a big jump. Here’s a summary:
As you’ve probably heard, the IRS has announced the IRA and workplace plan contribution limits for 2023. Because most of those limits are tied to inflation, many increased substantially. Among the big jumps were the elective deferral limit for 401(k) and other workplace plans from $20,500 to $22,500 and the overall limit for all plan contributions from $61,000 to $66,000.
A solo 401(k) plan is a great retirement savings vehicle for self-employed business owners with no employees (other than their spouse). But if you’re considering a new solo 401(k), be aware that there’s a December 31, 2022 deadline to open up the plan if you want to make 2022 elective deferrals.
A solo 401(k) plan is a great retirement savings vehicle for self-employed business owners with no employees (other than their spouse). But if you’re considering a new solo 401(k), be aware that there’s a December 31, 2022 deadline to open up the plan if you want to make 2022 elective deferrals.
As we’ve reported, the IRS recently said it would waive the 50% penalty on RMDs missed in 2021 and 2022 for IRA beneficiaries subject to the 10-year payout rule who inherited in 2020 or 2021.
These waivers were announced in IRS Notice 2022-53. Although the Notice is not clear, it appears that beneficiaries are not required to take RMDs for years that the penalty waiver applies to. However, as things stand now, the grace period will end in 2023.
Question:
I am 72 years old and want to start taking RMDs. I have multiple accounts from teaching jobs that I had many years ago, plus a couple of traditional IRAs and a 401(k) with my current employer. Can I total all of these up as of December 31, 2021 and take an RMD based on that number, or does each account have an RMD based on its value?
When it comes to IRAs and workplace plans, the concept of the “required beginning date” (RBD) is a “really big deal” again.
The RBD is the first date you’re required to start required minimum distributions (RMDs). For traditional IRAs, the RBD is April 1 of the year following the year you turn age 72. (But if you were born before July 1, 1949, your RBD was April 1 of the year after the year you turned 70 ½.) There are no lifetime RMDs for Roth IRA owners, so they are always considered to have died before the RBD with respect to their Roth IRAs.
