SECURE Act 2.0
The SECURE Act 2.0, signed by President Biden on December 29, 2022, picks up where the original SECURE Act left off and further reforms the retirement planning landscape. We’ve prepared a list of a few of the key changes that may affect you going forward:
- The age at which individuals must take required minimum distributions (RMDs) has increased from age 72 to age 73, 74, or 75 depending on the taxpayer’s year of birth.
- Beginning in 2024, a surviving spouse is allowed to be treated as the deceased spouse for RMD requirements. This means the surviving spouse does not have to begin taking RMDs from the deceased spouse’s retirement account until the date on which the deceased spouse would have met the age requirement. California will conform to this provision. In most cases, financial advisors will determine the amount of RMD for the taxpayer but if needed, please contact our office to assist with these calculations.
- Starting in 2025, individuals aged 60 – 63 will be able to make catch-up retirement contributions up to $10,000. This is only applicable to individuals who meet the age requirement after December 31, 2024. California is partially conforming to this provision as the tax deduction will be limited to the annual contribution amount for those 50 years and older instead of this special circumstance.
- Beginning in 2024, individuals who have held a 529 plan for 15 years or more can now make a direct trustee-to-trustee rollover from the §529 plan to a Roth IRA. An individual can only rollover up to $6,500 annually (current limit) and $35,000 in their lifetime. Any personal contributions made directly into the Roth IRA account could affect the amount eligible for rollover from the §529 account in the same tax year. California will not conform to this provision, which means earnings from the §529 account included in the rollover to Roth IRA will be taxable on the state tax return and subject to penalties on the California return.
For more information about the SECURE Act 2.0 and how it impacts you, please reach out to your DKC representative.