Do you know what parts of the Secure Act 2.0 will impact you? Don’t worry, we do. Here are a few key changes you should be aware of: 

The Secure Act and the Secure Act 2.0 have brought a lot of changes to the retirement planning world in the last few years.  We can’t begin to cover all the changes, so we are only going to touch on a few:

Required Minimum Distributions (RMDs)

The age you have to start taking RMDs from your IRA has increased to 73 and will increase again to 75 in 2033. This is important because it means you’ll have more time before you’re required to take money from your retirement savings.

The next change is about inheriting your spouse’s retirement account.  If your spouse is younger than you and passes away and you inherit their IRA – the RMD can be calculated on THEIR age, not yours. That’s a big benefit because it gives you more time before you have to start taking distributions.  Once RMDs start, using the younger spouses age keeps the withdrawals lower than if you used your own age.  Lower distributions means lower taxes.

Qualified Charitable Distributions (QCDs)

Another change from the SECURE ACT 2.0 is about Qualified Charitable Distributions -or QCDs.  If you make a QCD directly from your IRA to a charity, it’s not taxable to you.  In the past, you could only do a QCD once you started RMDs, which was at 70 ½.  Even though the RMD age is now 73, you can still do QCDs at 70 ½.  That’s good news if you want to begin QCDs before your RMD age.  And once you reach RMD age, those donations will help satisfy your Required Minimum Distribution. 


The next change is about 529 college savings accounts.  Are you concerned about overfunding your kids or grandkids 529 account?  The SECURE ACT 2.0 paved a way to get funds out of a 529 without penalty if you end up not using it.  Any unused funds can now be transferred into a Roth IRA for the recipient, with some limitations, helping them get a jumpstart on their retirement savings.

SIMPLE and SEP IRA Accounts

Lastly, small business owners can now offer Roth savings options on their SIMPLE and SEP IRA accounts for their employees.  As of this recording, we are still waiting on IRS guidance for setting up these features, so keep checking with us for updates.

We know this is a lot to remember, and we threw a lot of financial lingo at you:  IRA, QCD, RMD???…………What?   Just kidding!  We don’t expect you to remember it all, that’s what we’re here for.  This is what the team does every day.  If you have questions about any of the SECURE Act changes, please give us a call.

Securities offered through Raymond James Financial Services, Inc., member FINRA / SIPC. Investment advisory services offered through Raymond James Financial Services Advisors, Inc.. Aristata Financial is not a registered broker/dealer and is independent of Raymond James Financial Services.

Please note, changes in tax laws may occur at any time and could have a substantial impact upon each person’s situation. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional.

As with other investments, there are generally fees and expenses associated with participation in a 529 plan. There is also a risk that these plans may lose money or not perform well enough to cover education costs as anticipated. Most states offer their own 529 programs, which may provide advantages and benefits exclusively for their residents. The tax implications can vary significantly from state to state.

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