Retirement Planning Refresher: What Retirees Need to Know About SECURE Act 2.0 Eagle Wealth Management Group

The SECURE Act 2.0, signed into law in late 2022, brought significant changes to retirement savings and planning—namely, the rules around how retirement accounts work and can be used. As a retiree or someone approaching retirement, understanding these changes is crucial for optimizing your financial strategy. Let’s explore some key aspects that may directly impact you.

  1. Required Minimum Distributions (RMDs) at 73

Good news for those who want to keep their money invested longer! The age for taking RMDs has increased from 72 to 73 in 2023 and will further rise to 75 in 2033. This change allows your retirement funds more time to grow tax-deferred.

  1. Reduced Penalties for Missed RMDs

If you accidentally miss an RMD, you’ll face a less severe penalty. The tax has decreased from 50% to 25% of the amount not taken, and if corrected promptly, it can be further reduced to 10%.

  1. Elimination of RMDs for Roth 401(k)s

Starting in 2024, Roth 401(k) accounts will no longer be subject to RMDs during the owner’s lifetime, aligning them with Roth IRA rules. This change provides more flexibility in managing your tax-free retirement savings.

  1. Enhanced Catch-Up Contributions

For those aged 60 to 63, catch-up contribution limits to 401(k)s will increase from $7,500 to $10,000 annually starting in 2025. This boost can help you accelerate your savings as you near retirement.

  1. Employer Matching for Student Loan Payments

If you’re still paying off student loans, your employer can now “match” your loan payments with contributions to your retirement account. This innovative approach helps you save for retirement while managing education debt.

  1. Emergency Savings Access

The new law allows for penalty-free withdrawals of up to $1,000 per year from retirement accounts for emergency expenses. You have three years to repay the withdrawal, providing a safety net without derailing your long-term savings.

  1. Expanded 529 Plan Options

After 15 years, unused funds in a 529 education savings plan can be rolled into a Roth IRA for the beneficiary, up to a lifetime limit of $35,000. This change offers more flexibility if your children or grandchildren don’t use all their education funds.

  1. Automatic Enrollment in Workplace Plans

For new workplace retirement plans starting after December 31, 2024, employees will be automatically enrolled. This ensures more people start saving early, though you can opt out if desired.

  1. Saver’s Credit Changes

The saver’s credit for lower-income earners is evolving. Instead of an immediate tax break, the government will match contributions to retirement accounts, potentially resulting in more substantial long-term savings.

 

Stay informed, stay proactive, and make the most of these new provisions to enhance your financial well-being in retirement. The SECURE Act 2.0 offers valuable tools to strengthen your retirement savings – it’s up to you to put them to work!

As you navigate these changes, remember that they’re designed to provide more flexibility and opportunities for building a secure retirement for yourself. So, how you apply these new rules to your situation is dependent on you! Reach out to us to understand how these updates apply to your specific situation and how to best leverage them for your retirement strategy.

 

 

This information is provided as general information and is not intended to be specific financial guidance.  Before you make any decisions regarding your personal financial situation, you should consult a financial or tax professional to discuss your individual circumstances and objectives. The source(s) used to prepare this material is/are believed to be true, accurate and reliable, but is/are not guaranteed.

Financial Planning and Advisory Services offered through Eagle Wealth Management Inc., a ​Registered Investment Advisor. Eagle Retirement Plans, Inc. and Eagle Wealth Management Group Inc. are affiliated entities.  Brokerage services offered through Concorde Investment Services, LLC, Member FINRA/SIPC.Eagle Retirement Plans, Inc. and Concorde Investment Services, LLC are not affiliated entities

 

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This communication is for informational purposes only and does not purport to be a complete statement of all material facts related to any company, industry, or security mentioned. The information provided, while not guaranteed as to accuracy or completeness, has been obtained from sources believed to be reliable. The opinions expressed reflect our judgment now and are subject to change without notice and may or may not be updated. Past performance should not be taken as an indication or guarantee of future performance, and no representation or warranty, express or implied, is made regarding future performance. This notice shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any state in which said offer, solicitation, or sale would be unlawful before registration or qualification under the securities laws of any such state.

Readers who are not market professionals or institutional clients of Eagle Wealth should seek the advice of their financial advisor before making any investment decisions based on this communication. Additional information on any securities mentioned is available on request. Financial Planning and Advisory Services offered through Eagle Wealth Management Group Inc, a Registered Investment Advisor. Brokerage services offered through Concorde Investment Services, LLC, Member FINRA/SIPC. Eagle Wealth Management Group, Inc. and Concorde Investment Services, LLC are not affiliated entities under common ownership.