SECURE Act 2.0 for Individuals

At the end of 2022, Congress passed a new round of laws aimed at creating a secure retirement for Americans. Here are some of the highlights.

RMD AGE INCREASES

Beginning in 2023, the age to start taking required minimum distributions (RMDs ) from qualified retirement plans increases from 72 to 73. Then, beginning in 2033, it will increase to 75. You have until April 1 of the year after attaining that age to take your first RMD.

Starting this year, the penalty for failing to take an RMD is reduced from 50% to 25%. If the mistake is corrected in a timely manner, the penalty is reduced to 10%.

INFLATION ADJUSTMENTS

Beginning in 2024, the IRA catch-up contribution amount for taxpayers over age 49 and qualified charitable distributions (QCD) will be indexed annually for inflation.

EXPANDING EXCEPTIONS

Starting in 2024, there will be no early withdrawal penalty on distributions of up to $1,000 per year if needed to meet emergency expenses. There are limitations to taking more than one distribution in a 3-year period.

Starting in 2026, distributions of up to $2,500 per year will be allowed to pay long-term care premiums. Also, there are new exceptions for distributions to domestic abuse and terminally ill individuals. Allowed withdrawals for natural disasters, public service workers, private sector firefighters, and correctional officers have been expanded.