Several Ways that SECURE Act 2.0 Might Affect Your Retirement Planning (Episode #280)

0:31 Well, good afternoon, Michiganders. It is Tuesday, May nine, twenty twenty three, and of course this is Tuesday with Tom, Michigan's only weekly podcast where we answer your questions about a state planning and a state settlement in Michigan, and we don't send you a bill. As always, I'm your host, Tom Doyle, a state planning attorney, lifelong Michigan resident, and ambassador for all things good in this great state of Michigan. Welcome, Welcome to today's program. Will just a brief recap. Last week's episode talked about when two or more people own Michigan real estate the various ways that it can be owned. So, if you're looking at having real estate in Michigan that you're going to own with somebody else, or perhaps you already do, when you're not sure how it is owned and how it matters how it is owned, I invite you listen to last week's episode where I explain the different ways that people can own real estate in Michigan. Today's program, I'm going to talk a little bit about taxes today, in particular the several ways that the Secure Act two point zero might affect your retirement planning. But Please remember that what I'm about to discuss is, as always for educational purposes only. It

2:06 is not intended to be legal advice or tax advice for you. You always need to work with your tax advisor and a state planning attorney and financial advisor to determine what is appropriate for you. Several ways that the Secure Act excuse me, might affect your retirement planning. Well back in December twenty twenty two, not that long ago, President Biden when he signed his one point seven trillion dollars tax bill into law, it included the Securing a Strong Retirement Act twenty twenty two, otherwise called Secure Act or Secure two point zero Act, and the whole point of that legislation was to encourage retirement investing. So let's talk about today several ways that the Secure Act might impact your retirement planning.

3:30 And let's begin with required minimum distribution. Y'all know what those are. You have to start taking your funds out of your IRA at a certain age. Well, one of the changes that was made under Secure Act two point zero is the age of rmds has gone up. The original Secure Act push the RMD from seventy point five to seventy two, but Secure two point oh Act has now raised the age to seventy three beginning this year and will increase it further to seventy five by twenty thirty three. So looking at your required minimum distributions, you need to know what the new ages are at which you are going to be required to make those minimum distributions from your retirement accounts. A second way that Secure Act two point zero might affect your retirement is in the area of ketchup contributions. The idea being if you are an older individual, you have the opportunity to contribute additional amounts beyond the normal annual contribution limits to catch up if you will because of the age to increase the value of your retirement accounts. So individuals fifty y're older is who it's directed to have different

5:02 ways to maximize savings as they retire or as they approach the retirement age. While Ketchup contributions for I raise are currently maxed out at a thousand dollars, meaning in addition to the minimum amount, if you're fifty year older, you can contribute additional thousand dollars. The good news is that ketchup contribution amount is going to begin being adjusted for inflation in increments of one hundred dollars beginning in twenty twenty four, So over time, presumably that one thousand dollars amount will stay abreast of inflation if you will and allow additional funds to be utilized added to your iray beyond the normal contribution limits to help you catch up with your contributions. In twenty twenty five, the Ketchup contribution maximums are going to rise for investors between the ages of sixty and sixty two in an employer plan, So if you have an employer plan, you're going to be able to have ketchup contributions in your employer's plan as well. The limited is going to be increased to fifty percent more than the regular ketchup limit or ten thousand dollars,

6:34 whichever is greater. So those of you who are involved in employer contributions programs are also going to have some additional ketchup opportunities inside those plans as well. Good news for those of you who have ROTH plans through your employer now the vested employer contribution amount is also going to be eligible for WROTH treatment. Until now your amount might have been available and attributed for WROTH treatment, but your employer's vested amount was not. Now the employer's invested amount also is eligible for ROTH treatment. Also also no more lifetime required minimum distributions for employer plan WROTH accounts effective in twenty twenty four. So in twenty twenty four, if you have a ROTH four one K or WROTH four H three B, you will no longer have lifetime required minimum distributions from those accounts, similar to what's been the status with non employer ROTH accounts. Staying additional, looking at ROTH,

8:07 where now have the opportunity or small business owners have the option to offer ROTH versions of their simple or sep ROTH IRA account or of their IRA accounts. So if you're offering either a simple A retirement account or sep ROTH accounts to your employees, you now have the ability to offer those as I as ROTH I or WROTH accounts excuse me as wells, which will be giving your employees some additional planning options now that they will be can be involved in ROTH type accounts. Good news for those of you who do five twenty nine plans.

8:56 Part of the issue with five twenty nine education plans has been well, what if the beneficiary doesn't use up all the funds for educational purposes? Now what Well, beginning in twenty twenty four, of course, subject to certain exceptions, but in general, beginning in twenty twenty four, five twenty nine plan assets can be rolled over into roth IRA. So if you have a beneficiary that you have funds set aside in a five twenty nine plan and they don't use those funds up, you might have the ability to have those funds rolled over to a roth IRA for the beneficiary. Now, there's going to be some requirements or restrictions on those. For example, the five twenty nine account must be at least fifteen years old, the amount to be rolled over must have been in the account for at least five years. The roth account has to be in the name of the plan beneficiary, and roll over contributions have to still be within the roth IRA annual contribution amounts. And there is a maximum thirty five thousand dollars for lifetime rollovers from the five twenty nine plan to the roth IRA. But it does give you some opportunity to look at the excess contributions in your five twenty nine plans and what you might be able to

10:28 do with those. Another change, Qualified charitable distributions qcds. That's where you've got money in your IRA or money in your wrath, and you're looking at recurred minimum distributions, and rather than taking the required minium distribution, you direct funds from those accounts to a qualifying charity. That's called they qualified charitable distributions, and then it counts borge. You require them in distribution so you don't have to take the money first and then pay the tax on it and then make the contribution to the charity. It can go right from your retirement plan to the charity, which you're basically transferring if you will pretaxed funds. Currently, individuals can make up to a hundred thousand dollars excuse me of qcds annually beginning at seventy and a half well under Secure two point zero Act. Starting in twenty twenty four, the QCD limit is going to now be indexed for inflation, which means it's going to obviously at some point be substantially more than the one hundred thousand dollars that is currently available annually. Additionally, starting this year, that would be in twenty twenty three. You can now use qcds to fund charitable remains your trusts and to fund charitable gift annuities, so you're

12:03 no longer limited to simply having the funds directed to an existing charity as in the past, but there might be some tax planning involved in why you're looking at setting up a charitable remainder trust or perhaps a charitable gift annuity, and you can now have those contributions directed to those trusts and gift annuities and it will still qualify as the qualified charitable distribution. So those are just a few.

12:43 I'm trying to look at my list here and see if there's anything else that I wanted to mention, but I think those are the ones. As I was reading through some articles recently that I wanted to make sure I pointed out to you. There recurred distribution ketchup contributions, invested employer contributions. No more requirement distribution for the employer WROTH accounts in twenty twenty four offer the employers have the ability to offer simple incept roth iras the big one though for many of you is going to be that ability to roll over assets room A five twenty nine plan into a roth IRA. And again for those of you who are using qualified charitable distributions as part of your tax planning strategy and your gifting strategy, that one hundred thousand dollars annual is now going to be index for inflation and you can now have those funds directed to charitable remainder trust and charitable gift annuities. Of course, as always, Amanda and I would be honored

14:18 to have the opportunity to help you protect your loved ones by putting together your state plan, perhaps amending a plan that you already have, or assisting you in settling a loved ones state. Simply go to our website goil apc dot com. There you're going to find all the information that you need on how to schedule an in person consultation at the New East Lansing office, or how to schedule virtual consultations via Zoom or telephone wherever you happen to be in the state of Michigan. We can likely work with you using technologies such as Zoom, mail, the Internet, etc. And reminder too. If you're looking for an individual legal document, perhaps all you need is an updated certificate of trust. At the website you're going to find our Legal store. Through the Legal Store, you can order individual legal documents that can be prepared and emailed to you. You'll also find information currently on documents and you have the ability to order them through our Facebook page as well. So again, please visit DOULAWPC dot com for complete information on all of the services that we provide and how it is that you can schedule a consultation with us. Well, that's

15:54 going to be it for today's show, though as always, if you have a comment about the program, perhaps at topic that you'd like to have me discuss, or questions that you'd like to have answered, please send me an email Tom at Tuesday with Toom dot com. Also, please follow us on Facebook and invite your friends and family to do so. That would be at Tuesday with Tom and the office Facebook page as well is Doyle Law PC. Remember two that Tuesday with Tom is available on Apple Podcasts, Spotify, Google Podcast, iHeart Radio, Speaker or perhaps whatever other service you use for listening to your podcast, and as always you can ask your smart speaker to play Tuesday with Tom. Well, thank you again for spending some of your time with us today and as always, I hope that you have an awesome day and an awesome week in Michigan. Stay safe. Tuesday with Tom has been brought to you by the estate planning attorneys at Doyle Law PC. To learn how we can help you with your estate plan or with settling a loved ones estate, please call us today at five one seven three two three seven three six six. That's five one seven, three two three seven three six six