The SECURE 2.0 Act and How It Will Affect Your Retirement Savings

Passed in December of 2022, several provisions of the SECURE 2.0 Act went into effect on January 1st, 2023. This law sets forth a number of rules that affect retirement savings and could change the way you prepare for the future. Here is a summary from Elder Care Attorney Rob Slutsky regarding some of the key provisions of the SECURE 2.0 Act

Increased Age for Required Minimum Distributions (RMDs)

If you have any traditional IRAs, you probably already know you will be required to take minimum distributions from those accounts in the future. Previously, that began at age 70½ but the original SECURE Act raised it to 72. Now that the SECURE 2.0 Act has gone into effect, that age is now 73 and will be raised to 75 in 2033 for certain individuals. It also reduces or eliminates the excise tax imposed for not taking RMDs.

Increased Catch-Up Contribution Limits

Retirement savers over the age of 50 are allowed to contribute additional funds to some of their retirement accounts, over and above the primary contribution limit. In 2022, the contribution limit for traditional and Roth IRAs was $6,000, plus a $1,000 catch-up contribution. For 2023, the total IRA contribution limit has been raised to $7,500 including the catch-up contribution. The SECURE 2.0 Act also allows a second catch-up contribution for those over the age of 60 that brings their total contribution limit up to $10,000 per year.

Penalty-Free Withdrawals are Now Allowed Under Certain Circumstances

For those experiencing “unforeseeable or immediate financial needs relating to necessary personal or family emergency expenses,” the SECURE 2.0 Act allows for a penalty-free withdrawal of up to $1,000. This distribution can be taken once every three years, or once per year if the distribution is repaid within three years.

Mandatory Enrollment in Employer 401k Plans

Beginning on December 31st, 2024, employers will be required to enroll their eligible employees in any new 401k or 403b plans. Automatic deferrals must be set from 3-10% automatically, increasing by 1% each year to a maximum of at least 10% but no more than 15%. Employees who do not wish to participate will have to opt out of the plan.

Elder Law Attorneys in the Philadelphia Area

When you have assets stored in retirement accounts, it is important you take advantage of every tax break available to you, and also that you comply with any RMD rules. Failing to do so can cost you a large sum of money in tax penalties! You should also speak to an elder law attorney about the best way to ensure your heirs receive the most benefit from your retirement accounts after you pass away. 

Elder law attorney Robert Slutsky was one of the first in Pennsylvania to set up a dedicated practice specifically to address the concerns of seniors. That means he is one of the most experienced attorneys in the state dealing with elder law matters. As a trusted elder care attorney, Rob advises clients about how to include retirement accounts and other assets in their estate plan. Call Robert today at (610) 940-0650 or fill out the online form on our contact page to request your consultation with a Philadelphia, PA estate planning attorney. The team at Slutsky Elder Law has been serving Southeastern PA since 1992.

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