Last month, I spent three day in Kansas City learning about retirement plans.
I know this doesn't create a lot of "wow" factor for most, but I felt honored as I sat the feet of some of the insurance industry's greatest leaders. Ron Essary (pictured above) is one of the masterminds of annuities. He is sought after by insurance carriers to create retirement plans that will provide bonuses, life-time income, safety from the market, doubling factors (should the client get sick), etc. He is often referred to as the mad scientist of the annuity world and I feel a little smarter for being taught by him.
The good news for you, is that I came back with information that YOU should know about. The American retirement atmosphere has had some significant changes. I've listed a few below.
SECURE 2.0 legislation, a follow up to the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019, was passed as part of an omnibus appropriations bill on Dec. 29, 2022. This new wave of retirement reform is designed to help more Americans reach retirement with more savings. The following summary can help you get up to speed and modify plans to better secure your future.
RMD Age Raised
The age for taking required minimum distributions (RMDs) increased from 72 to 73 on Jan. 1, 2023. Anyone who has already begun taking RMDs from 401(k) plans or traditional IRAs must continue doing so. The RMD age will rise to 75 in 2033.
Emergency Withdrawal Opportunities
New rules allow one annual distribution of up to $1,000 from a retirement account without penalty. Larger withdrawals may be made for terminal illness, natural disasters, long-term care or other specific financial emergencies.
Catch-Up Contributions Increased
Clients aged 60-63 can add the greater of $10,000 ($5,000 for SIMPLE Plans) or 150% of the current regular catch-up contribution in 2025. The increased amounts are indexed for inflation after 2025.
529 Plan Changes
Effective in 2024, beneficiaries can roll over up to $35,000 from a 529 plan to their Roth IRA, subject to Roth IRA annual contribution limits assuming the 529 account has been open for 15+ years.
In 2024, Roth assets in an employer-sponsored plan will be exempt from lifetime RMDs. SEP and SIMPLE plans can allow Roth contributions beginning in 2023.
Student Loan Match
Starting in 2024, employers will be able to count student loan payments as plan contributions eligible for the employer match in a retirement account.
Beginning in 2025, employers are required to auto-enroll eligible employees to the new 401(k) or 403(b) plans. Long-term, part-time workers will also be allowed to participate in such employer plans.
Front Range Insurance Solutions offers a variety of safe-money retirement plans. Please reach out if you'd like to know more.
Meet the author: