Great news for 2023! The SECURE 2.0 Act has made a number of beneficial changes for employer sponsored plans. If you are 50 years or older you can make an additional catch-up contribution. The new maximum contributions are:
401(k), 403(b) – 22,500, catch-up contribution 7,500
IRA – $6,500, catch-up contribution of $1,000
SIMPLE – 15,500
In 2023, taxpayers must begin taking their first required minimum distribution (RMD) by April 1st of the year following the year they turn 73. This is up from 72 in 2022. For those of us under 63, that age increases to 75 in 2033.
If you are planning on donating to a charity, you can make a Qualified Charitable Donation, QCD, directly from your IRA and then it is excluded from your adjusted gross income up to $100,000, adjusted annually for inflation beginning in 2024. Please consult your tax advisor with regards to your required minimum distribution as there are substantial penalties for failing to take a required minimum distribution.
There were also a number of provisions that increase participation. Employees will now be automatically enrolled in employer-sponsored plans. Employers can now make a matching payment to a qualified retirement savings plan that matches a qualified student loan payment made by the employee.
Another huge benefit of the SECURE 2.0 Act is that taxpayers can now take an early withdrawal without incurring a penalty if their primary residence is in a federally declared disaster area. The taxpayer must take this withdrawal within 180 days of the declared disaster and must have incurred a financial loss due to the disaster. Domestic abuse victims can also take a withdrawal without penalty.
Please contact your tax professional for specific guidance.