Near the turn of the year, the signing of the SECURE Act 2.0 made broad changes to retirement plans. The goal of the Act is to make saving for retirement simpler and provide options for savers no matter their stage in life. In total 92 new provisions encourage savings, incentivize business participation, and provide flexibility for retirement savings. Some of these changes will take effect in 2023, while others begin in the coming years. Below is a quick summary of highlights from the Act.
SECURE Act 2.0 Changes:
- Required Minimum Distribution (RMD): Raised the age of required minimum distributions from 72 to 73. Age of RMD will increase to 75 by 2033.
- Catch-up Contributions: Beginning 2024, savers 50 years old and beyond are given additional saving ability with an increase to contribution limits.
- Additional Access to Retirement Funds: In 2024, participants may withdraw up to $1,000 annually for emergency expenses without tax penalties.
- Matching Contributions: Businesses are allowed to match contributions to Roth (after-tax) accounts.
- Automatic Enrollment: New plan participants are automatically enrolled in retirement savings.
Contribution Limits for 2023:
- IRA plans: $6,500 and $7,500 if age 50+
- 401k plans: $22,500 and $30,000 if age 50+
Our partners at LPL provide the additional commentary on changes from the SECURE Act 2.0.