At the end of 2022, President Biden signed the Consolidated Appropriation Act, 2023.
Just another bit of legislation? Not necessarily, as one of many bills in it is aimed toward retirement—the SECURE 2.0 Act of 2022. It's a huge initiative that’s causing a lot of changes in the way people plan for the future. SECURE 2.0 contains a whopping 92 provisions to enhance retirement savings.
Not a problem. We’re breaking down two of the top takeaways you should know from SECURE 2.0.
1. Higher IRA Catch-Up Contributions
Didn’t get to put aside as much as you would have liked? Life happens, and unexpected expenses can throw your retirement plans off course. But what if you had a do-over? Change is coming to help you catch up, thanks to SECURE 2.0.
Beginning in 2025, individuals aged 60-63 can make catch-up contributions of up to $10,000 annually to a workplace plan—increasing 2023’s $7,500 limit for those 50 and older. Of course, there’s a bit of a catch: By 2026, individuals aged 50 and older who earned over $145,000 in the prior year must make catch-up contributions specifically to a Roth IRA in after-tax dollars.
2. Changes in Required Minimum Distributions (RMDs)
“When can I get my money?” That’s mostly up to you, but SECURE 2.0 shifts age requirements for RMDs, moving the required distribution age from 72 to 73 in 2023—all the way to age 75 by 2033.
SECURE 2.0 also reduces the excise tax, or penalty you pay for not taking an RMD. As of December 31, 2022, the excise tax has dropped from 50 percent to 25 percent. And if an RMD is corrected in a timely fashion, this can go as low as 10 percent.
Navigate Retirement and SECURE 2.0 with BNC National Bank
Retirement looks different every day—from the time you spend with the grandkids to the money that helps you carry on. SECURE 2.0 streamlines when and how you can collect the vital funds for your golden years.
Moving toward retirement? BNC National Bank is ready to help you build toward financial freedom—even if that means navigating retirement reforms. Get in touch with us for personalized retirement planning, and be sure to check out our Guide to Retiring for comprehensive information before we chat!