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New Secure Act 2.0 discussion for 2023

Planning Matters Radio / Peter Richon
The Truth Network Radio
January 14, 2023 9:00 am

New Secure Act 2.0 discussion for 2023

Planning Matters Radio / Peter Richon

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January 14, 2023 9:00 am

SECURE Act 2.0: Later RMDs, 529-to-Roth Rollovers, and Other #Tax Planning Opportunities

Congress recently passed #SECURE Act 2.0, which will bring several changes to retirement account rules. Peter Richon with Richon Planning and Erin Kennedy break down the big takeaways, including some unique opportunities, including:

-RMD Age Increase

-QCDs Will Be Expanded

-529 Plans

These changes, however, will make proactive tax planning even more important. Keep in mind, when you delay those Required Minimum Distributions, it will lead to larger account balances at death, which could create a significant tax burden for your beneficiaries.

If you'd like to talk through these changes and how they affect your #retirement plan, please reach out to Peter for a complimentary consultation by calling (919) 300-5886 or by visiting

#rmds #QCDs #taxplanning #wealthmanagement #taxes #roth


We want you to plan for success. Welcome to Planning Matters Radio.

Peter, it's really good to see you today. We are talking SECURE Act 2.0. This is a big deal that affects almost everyone. We're going to break down the big takeaways and also some unique opportunities. So Congress very recently passed SECURE Act 2.0, which will bring several changes to retirement account rules.

So we're going to break down again the headlines and also some of those tax planning opportunities. So we've talked about the SECURE Act before. What's new here and who does this affect exactly?

Well, it affects just about everyone. I mean, these are retirement account law changes by and large. The acronym, we all know the government loves acronyms, SECURE Act is setting every community up for retirement enhancement.

And, you know, a lot of times what the bill actually does is kind of opposite of what the acronym would insinuate. But it is part of the one point seven trillion dollar omnibus spending bill, which was 4000 plus pages. The SECURE Act 2.0 language started on page two thousand sixty four or something like that.

So there's really a lot to dive into here. High level, I think that there is nothing as impactful as the end of the stretch IRA that was part of the SECURE Act version one. But in totality, it covers more ground with SECURE Act 2.0. I think there are more implications and more different aspects of planning and retirement accounts that will be affected. So this probably has more total change, but nothing quite as as deeply impactful as the end of the stretch IRA.

But most important, Aaron, is people need to be aware of this and review their plans, because here we are in 2023. And I still talk to people who don't know what the SECURE Act 1.0 was passed back in 2019. And it's probably because of the way that it was passed kind of right before Christmas and enacted into law and then and then goes into effect January one. It seems to be kind of Congress's routine to get these bipartisan bills passed in a rush right between the Christmas and New Year holiday. Right. And the news biz, we say they buried it. So we're bringing it to the surface.

Yeah. So let's talk through some of the bigger changes. One of the more significant ones is the new RMD age table. So why is this significant? Well, it does push back the required minimum distributions, RMDs.

And in reality, I don't think this is all that impactful. It really does not make too much of a difference one way or another in my mind, because there's only a very small portion of people who don't actually already need to take income from their retirement accounts. But if we are in that small percentage of people that don't need to take income from our IRAs or our tax qualified deferred retirement accounts, the government has their deadline. That's what the RMD is, because you've got a bill inside of your tax deferred accounts. And if you don't believe that it's a bill, wait till the government starts requiring their minimum payment through these RMDs. But just because we can defer and delay, Aaron, doesn't mean that it's necessarily in our best interest. Should we delay and defer is a much more important question, because defaulting to the government's plan is not often what is in our best interest.

And Albert Einstein said the most powerful force on the planet is the power of compounding interest. I think the IRS was paying attention. They may have been the only one paying attention and really doing the math behind that statement and allowing the accounts and the tax bill to continue deferring only leads to higher taxes into the future. And so the RMD being pushed back and it's graduated, by the way, but currently it's 72 moves to 73. And then there's still some gray area in the bill.

I think it's due to a drafting error. But if you were born between 1959 and 1960, eventually it's going to be pushed back to 75. They'll probably come back and solidify the wording on that. But right now there is a little gray area around those born in 1959.

But RMD is moving back. That is an impactful provision of secure action 2.0. And next is that QCD, something that we've talked about before, qualified charitable distributions, they will also be expanded.

Why is this significant? Well, so now we can make a one time gift of up to $50,000 through a qualified charitable distribution to a charitable gift annuity, a charitable remainder trust or a charitable remainder annuity trust. So there is some provisions there where we can have truly tax free money. And by the way, the provision for the QCD was previously $100,000.

But this is kind of a subset of how you can give that. You can also gift up to $100,000 to your charity through these new provisions and it's going to be inflation adjusted moving forward. So we're going to continue to see that number moving up, which is really the big change with secure act 2.0. And something that we were talking about a lot offline, Peter, you and I, because we both have young kids, a really interesting change to 529 plans. Yeah, this one is, in my mind, huge and one of the best benefits of secure act 2.0. There were a lot of people that may have been hesitant about saving for children's college expenses in a certain way utilizing the 529 because if children don't need it, if we can't transfer it to siblings, if they don't need it, and we end up not utilizing that money for secondary education, higher education expenses, which by the way, they sort of loosened what that exactly means several years ago. But if we didn't have those expenses, then we would lose all of the tax benefits. Well, now up to $35,000 of 529 money can be rolled over to Roth IRA money in your child's name. So if maybe they didn't need the benefit of the Head Start for their college education spending and expenses, now at least that money doesn't lose all the benefits and can give them a really good Head Start in their retirement savings progress. Because I know you like Roths with all that tax-free money.

I do, especially, I mean, the younger you are, the better they are. Yeah, good point. The power of tax-free growth for life is nothing to ignore, folks. And now again, I know tax planning, one of your most favorite subjects. So how do we incorporate all of these new changes then into our tax planning? Well, again, I think a lot of people have not reviewed their plans even after the passing of SECURE Act 1.0. These are the most sweeping, impactful legislative changes to your retirement accounts and the laws governing retirement maybe in the last 45 years since ERISA incepted the 401k. So certainly in the last generation, the SECURE Act ended the stretch IRA, the SECURE Act 2.0.

We've hardly scratched the surface here. Many, many other impactful changes with the SECURE Act 2.0. And if you have not sat down specifically discussing how do the SECURE Act laws change what I am doing for my retirement, if that conversation has not been brought up, then it is really a strong indicator that it is time for a review and evaluation.

And even if it has, guess what? SECURE Act 2.0 changes the laws again and it's time to sit down and have that review yet again. Because these laws really prove that Congress dictates the rules when it comes to your retirement, your retirement accounts, and we've got to make sure that what we are doing keeps up with those law changes.

Right. Yeah, either you have to stay on top of it or work with somebody like you, Peter, who keeps me updated on all these changes. So I want to kind of circle back a little bit to the RMDs because this is a really important consideration because when you delay taking those RMDs, it does lead to a larger account balance at death. And Congress stripped away the lifetime stretch IRA rules, which again, you mentioned a second ago. So almost all beneficiaries must take out the entire balance over 10 years. That is a very significant tax burden. You know, I hear a lot of people talking about the estate tax or the death tax and they have concern about, well, am I going to encounter the estate tax? Will my beneficiaries be hurt by that death tax?

In reality, at least at current levels, and these could also change into the future and there's been a lot of discussion about it, but at current levels, that is not a problem most people are going to experience because the levels are so high. Now, if you do have assets that would encounter estate tax issues, man, it makes it super important that you do some very detailed, proactive planning. But what most people are going to pass on to their beneficiaries is not an estate tax. It's an income tax because the majority of assets that are passing generationally, other than the value of homes, is in yet-to-be-taxed, tax-deferred retirement accounts.

Well, Uncle Sam is one of, if not the largest beneficiaries of those accounts, and they just accelerated the rate at which those accounts need to be liquidated, which pushes those beneficiaries, in many cases, into even higher tax brackets. So we really need to sit down and look at estate planning, tax planning, and financial planning as if they are connected, coordinated pieces. If your professionals are not communicating on your behalf or the plan is not really looking at all three of those aspects, then you are probably missing out on some important opportunities and or risks or issues that you need to be aware of.

And so, yeah, we really need to look at that. RMDs, again, a big headline-grabbing piece of this. But pushing back the RMD for a couple extra years may or may not make sense. And in fact, in more cases than not, I'm seeing that it probably ends up costing either you or your beneficiaries more by delaying distributions from your IRA than controlling taxes in the long run. And by the way, we've got some great opportunities to do Roth conversions now while we know what tax rates are. If we continue to defer and delay, as Congress has proven, yet again, they get to control the laws dictating at what rate those dollars will be taxed in the future, and they can change that. And everybody I talk to worry about taxes going up. Well, again, some very significant changes, and I feel like it does affect almost everyone.

I'm excited about the 529 changes. But Peter, this was really helpful to talk through. But like you mentioned, kind of the earlier you can have a conversation with a professional, the better. So what's the best way to reach you? Yeah, give me a call, 919-300-5886, wherever you're at in your process. I believe everybody's got the ability to feel confident about their financial and retirement plan and situation. If given appropriate information and education, that's our mission at Rashan Planning.

So love to talk to you wherever you're at in that progress and make sure you've got a plan to get where you want to go. 919-300-5886, 919-300-5886. Or you can visit online, It looks like

You can email me, peter at All right, Peter, thank you. Always a pleasure, Erin.

Thank you. This has been Planning Matters Radio. The content of this radio show is provided for informational purposes only and is not a solicitation or recommendation of any investment strategy. You are encouraged to seek investment, tax or legal advice from an independent professional advisor. Any investments and or investment strategies mentioned involve risk, including the possible loss principle. Advisory services offered through Brooks' Own Capital Management, a registered investment advisor. Introductory duty extends solely to investment advisory advice and does not extend to other activities such as insurance or broker dealer services. Advisory clients are charged a quarterly fee for assets under management while insurance products pay a commission which may result in a conflict of interest regarding compensation.
Whisper: medium.en / 2023-01-14 10:15:47 / 2023-01-14 10:20:56 / 5

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