2023 Retirement Plan Changes

Ken Hargreaves, CFP®, AIF®, AWMA®, CRPC®
There is excellent news on the retirement front with the enactment of long-awaited changes to retirement rules in the form of Secure 2.0. This article quickly delves into the most relevant changes to Americans’ ability to plan for retirement.

1. Required Minimum Distributions (RMDs) can start at age 73.

  • Impacts folks aged between 64 and 72.
  • If you turned 72 in 2022 or earlier, you must continue taking RMDs as scheduled.
  • If you’re turning 72 in 2023 and have already scheduled your withdrawal, you may want to consider updating your withdrawal plan.
  • Heavily affects Roth conversion strategies by giving you more time to convert and catch up to pre-conversion levels before beginning RMDs.

2. Employer Roth Contributions​

​Starting in 2023, employers can offer workers the choice to receive Roth matching contributions directly to their company Roth 401(K), where they’ll grow tax-free. Prior to this, companies could offer Roth 401(K)s but could not make post-tax Roth contributions.

3. Decreased Penalties

The penalty for missing all or part of an RMD decreases to 25% in 2023. However, if you correct the past-due RMD and pay taxes on it within two years, the penalty drops to 10%.

4. 529 Plan Roth Rollovers

If you have yet to use all of the funds in your 529 plan, you can potentially roll those funds into a Roth account – with some stipulations.
  • The Roth account must be in the same name as the 529 plan.
  • The 529 plan must be 15 years old.
  • Any profits earned or contributions made in the last five years cannot be rolled over.

5. The Backdoor Roth Conversion Strategy survived legislation.

Not a change, but still good news. If you are a high earner and don’t qualify to put directly into a Roth, you can still indirectly fund a Roth account through a Backdoor Roth Conversion.
If you have any questions about how these changes affect your financial plan, just click the button below to schedule a meeting!
Disclosures

Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment or strategy will be suitable or profitable for a client’s portfolio. All investment strategies have the potential for profit or loss. Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the author/presenter as of the date of publication and are subject to change and do not constitute personalized investment advice.

A professional advisor should be consulted before implementing any investment strategy. WealthGen Advisors does not represent, warranty, or imply that the services or methods of analysis employed by the Firm can or will predict future results, successfully identify market tops or bottoms, or insulate clients from losses due to market corrections or declines. Investments are subject to market risks and potential loss of principal invested, and all investment strategies likewise have the potential for profit or loss. Past performance is no guarantee of future results.

Please note: While we strive to provide accurate and helpful information, we are not Certified Public Accountants (CPAs). The information in this article is intended for informational and educational purposes only and should not be interpreted as tax advice. It is crucial to consult with a CPA or tax professional to discuss you

Author

  • Ken Hargreaves, CFP®, AIF®, AWMA®, CRPC®

    A Florida native, and full-time Sarasota resident, Ken founded WealthGen Advisors, LLC after spending more than fourteen years in the financial advisory industry. Ken holds multiple industry designations, as well as a master's degree in Financial Planning. Prior to founding WealthGen Advisors, Ken spent almost a decade in New York and then Texas as Vice President at The Capital Group, a $2T global investment manager serving institutional clients and pension funds.

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