SECURE ACT 2.0 CHANGES Countless retirement provisions will take effect in the coming years because of the act. Here are the ones to take note of during your 2023 planning. BY DANIEL F. RAHILL, CPA/PFS, JD, LLM, CGMA THREE YEARS AFTER THE SETTING EVERY COMMUNITY UP for Retirement Enhancement (SECURE) Act was enacted, SECURE Act 2.0 is now law, with the goal of “securing” American workers’ retirement options well into the future. With the act containing upward of nearly 100 new retirement provisions, here are six of the most notable changes taking effect this year. 1. RMD Age Increased Individuals saving for retirement via individual retirement accounts (IRAs) and most employer-sponsored retirement accounts must begin taking required minimum distributions (RMDs) when they hit a certain age. This age limit increases to age 73 in 2023 and age 75 in 2033. Increasing the age of when RMDs must begin benefits savers who don’t need the money for current living expenses, as it prolongs their investment timeframe, pushes out the income tax deferral on their account balances, and allows a longer window to consider and complete Roth IRA conversions. 2. RMD Excise Tax Reduced Prior law required those who failed to take their full RMD amount by the deadline to pay a tax of 50% of the amount not taken. SECURE Act 2.0 reduces this tax to 25% in 2023. The act further drops the tax to 10% of the amount not taken if account holders take the full RMD amount and report the tax by the end of the second year after it was initially due and before the IRS demands payment. 3. Qualified Charitable Distribution Rules Eased The new rule for qualified charitable distributions (QCD) from IRAs expands the types of “charities” that can receive the gift. Beginning in 2023, individuals can make a one-time gift of up to $50,000 (adjusted annually for inflation) to a charitable remainder unitrust, a charitable remainder annuity trust, or a charitable gift annuity. Previously, distributions had to go to charities with a 501(c)(3) status. However, disbursements to private foundations or donor-advised funds still aren’t allowed. Charitable remainder trusts and gift annuities provide income to a beneficiary during the grantor’s life; when the beneficiary dies, what’s left in the trust goes to a charitable cause. Unlike a direct charitable contribution, contributions to a split-interest entity benefit not only the charity but also the individual IRA owner. The overall economic impact is that a portion of what’s transferred goes to charity and up to 90% of the economic value of what’s transferred Six TO KNOW IN 2023 18 Nebraska CPAs
RkJQdWJsaXNoZXIy MTg3NDExNQ==