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Understanding How the SECURE Act 2.0 Impacts Your Retirement

Posted by Doug Hutchinson | CFA®, Director of Research and Trading

January 23, 2023

The Consolidated Appropriations Act of 2023, passed by Congress and signed into law by the President, contained several retirement related provisions collectively known as the “SECURE Act 2.0.”  The SECURE Act 2.0 is a follow up to the original Setting Every Community Up for Retirement Enhancement (SECURE) Act passed and signed into law in December 2019. 

Here are some of the key provisions of this new law: 

Raising the Required Minimum Distribution (RMD) Starting Age 

The SECURE Act 2.0 pushes back the age at which retirees must begin taking RMDs to age 75.  This provision will be phased in over the next ten years, so the starting age for RMDs will be pushed back to age 73 in 2023 and then pushed back again to age 75 in 2033.

The original SECURE Act moved the starting age to 72 in 2020 and the SECURE Act 2.0 has no impact on the RMD starting age of retirees who have already begun taking RMDs. 

Using IRA Distributions for Giving 

While the age at which RMDs begin will be changing, the SECURE Act 2.0 does not change the age at which Qualified Charitable Distributions (QCDs) can be made. 2 The earliest age at which an individual can make a QCD will still be 70 ½.  A QCD is an otherwise taxable distribution from an IRA that is paid directly from the IRA to a qualified charity.  
Also, the current annual limit of $100,000 for QCDs will be indexed to inflation going forward. 3  

Higher Catch-Up Contribution Limits 

Effective in 2025, workers between the ages 60 and 63 will see the catch-up contribution limits in certain employer retirement plans such as a 401(k) or 403(b) increased to the greater of $10,000 or 150% of the regular catch-up contribution limit.
Also, all catch-up contributions limits for all age groups will be indexed to inflation (including the IRA catch-up contribution annual limit which is currently $1,000) starting in 2024.
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Year End Financial Review and Planning Checklist

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Before the year ends, take some time to review your financial health. Here are 10 financial planning items to review before 2021 comes to a close. 1. Take your Required Minimum Distribution Required Minimum Distributions (RMDs) were temporarily suspended for 2020 due to COVID-19 relief legislation but RMDs are back for 2021 and beyond. If your 70th birthday is on or after July 1, 2019, you will have to take an RMD from your retirement account prior to December 31st once you reach age 72 in most situations.1 Note that Roth IRAs do not have RMDs. Consult with your financial advisor to determine the exact amount of the RMD that you need to take before December 31st. [+] Read More

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How Jobs and Financial Markets Intersect

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Lord Abbett Wants to Make Sure You Don't Overlook These Retirement Planning Milestones

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The Shaky State of Social Security

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If there’s a good word to describe the state of Social Security in America, it might be something like “uncertain.” And that’s a far cry from the reliable, dependable safety net that many retirees and future retirees have come to expect of the program. Many readers probably know where this is going – the familiar narrative that Social Security is underfunded, may run out of money soon, and may not be there for future generations. Even still, as the checks continue rolling in, the idea that Social Security is in trouble has a feeling of being far-fetched. For many, it feels like an issue that may indeed be true but doesn’t necessarily apply to you specifically. First signed into effect by President Roosevelt on August 14, 1935, the Social Security Act created a social insurance program designed to pay retired workers over the age of 65 continuing income after retirement. Since then, tens of millions of people have received benefits through the Social Security Act. Yet, the program was wrought with challenges from the start, and experienced financial peril as early as 1977.¹ And, despite attempts to keep it solvent, the Social Security program faces a major long-term shortfall. Surprisingly though, a large number of Americans seem unaware of this looming failure. [+] Read More

Do You Live in One of the Wealthiest Parts of the Country?

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For nearly 20 years WrapManager has been headquartered in the San Francisco Bay Area, which is notoriously (based on hard data) one of the most expensive areas in the world. And while we are a nation-wide investment manager, it comes as little surprise (to us at least) that 21 of the 100 wealthiest cities in the US are in California, with most them in the San Francisco Bay Area. This fun fact may have some readers now wondering what the 100 wealthiest cities/communities are, and whether you might live in one of them! (It left us quite curious.) Well, thanks to a Bloomberg analysis of 2016 US Census data, now you can find out. [+] Read More

What History Tells Us about Tariffs and the Threat of Trade War

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Avoiding Slow Failure in Retirement Planning

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