Happy New Year!

I hope you had a fantastic end to your 2022 and are feeling refreshed and ready for 2023.

I wish I were bringing over some green smoothies and pressed juices to kick the year off.

Instead, I have some new retirement rules for you. :)

Fun, right?

I'm going to try to make it easy for you.

But first, grab my 2023 Tax Cheatsheet [Free PDF].

It covers the most important annual limits as well as figures that are commonly referred to during the year.

Ok, let's dive in...

Secure Act 2.0

After months of debate, Congress finally passed some major changes to retirement laws at the end of 2022.

The changes are numerous, complex, and will roll out over several years.

In today's email, I'm going to focus on the changes for 2023.

1. The age at which required minimum distributions (RMDs) begin increased to 73 in 2023.

This change impacts folks born between 1951 and 1959.

If you turned 72 in 2022 or earlier, you will need to 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.

(Note: SECURE 2.0 also pushes the age at which RMDs must start to 75 starting in 2033.)

2. The penalty for missing all or part of an RMD decreased 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%.

3. Qualified Charitable Distributions (QCDs) have a few more options.

Starting in 2023, folks who are aged 70½ or older can gift a one-time amount of $50,000 (adjusted for annual inflation) to a:

• Charitable Remainder Unitrust (CRUT);
• Charitable Remainder Annuity Trust (CRAT); or a
• Charitable Gift Annuity (CGA)

4. Roth savings get a boost.

Starting in 2023, employers can offer workers the choice to receive vested matching contributions directly to their Roth account, where they’ll grow tax-free.

Also, Roth contributions to SIMPLE and SEP IRAs are authorized in 2023.

However, we'll have to wait for the IRS (and custodians like Fidelity and Schwab) to work out procedures before people can take advantage of these new opportunities.

5. More folks can take early distributions from their retirement accounts without penalty.

Starting in 2023, victims of disasters and folks who are terminally ill will be able to access their retirement accounts early without incurring a 10% penalty.

💥 BONUS: 529 plan owners will have the option to rollover up to $35,000 into a Roth.

This does not go into effect until 2024, but it was too interesting not to share today.

Note, there are a lot of requirements that must be met including:

• The Roth IRA account must be in the name of the 529 plan beneficiary
• The 529 plan must have been open for at least 15 years
• Account holders can't roll over contributions (or earnings) made in the last 5 years.

Also, in addition to the $35,000 maximum, annual limits for the rollover would have to be within the annual contribution limit ($6,500 in 2023).

Bottom Line

There’s A LOT to unpack in the new laws.

Many new rules -- including changes to catch-up contributions and auto 401(k) enrollment -- will roll out in 2024 and 2025.

As we’ve learned with previous new regulations, Congress might enact new laws, but we often have to wait for the IRS and other agencies to catch up before we can fully make use of them.

Stay tuned for more updates as the new rules shake out.

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Stay wealthy,

Taylor Schulte, CFP®