Thanks to SECURE Act 2.0, there are more ways to save in a Roth account, which allows after-tax contributions to reap tax-free rewards during retirement. Specifically, you can now make Roth-type contributions for the employer profit sharing side for both SEP IRAs and Solo 401(k) plans. Plus, catch-up contributions can now be made in Roth, along with employer matches.

On this episode of Adam Live, IRA Financial founder, Adam Bergman, Esq. will discuss SECURE Act 2.0, and the various provisions in the bill that will help more people save in a Roth tax-advantaged retirement account.

Join us LIVE on Wednesday, April 19th at 12:00PM EDT!
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Read more about SECURE Act 2.0:
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About IRA Financial:

IRA Financial Group was founded by Adam Bergman, a former tax and ERISA attorney who worked at some of the largest law firms. During his years of practice, he noticed that many of his clients were not even aware that they can use an IRA or 401(k) plan to make alternative asset investments, such as real estate. He created IRA Financial to help educate retirement account holders about the benefits of self-directed retirement plan solutions.

IRA Financial is a retirement account facilitator, document filing, and do-it yourself document service, not a law firm. IRA Financial Group does not provide legal services. No attorney-client relationship exists between Client and IRA Financial Group, its management, salespersons or IRA Financial’s in-house legal counsel. IRA Financial Group provides IRA retirement facilitation service and CANNOT provide Client with legal, investment, or financial advice. Prior to making any investment decisions, please consult with the appropriate legal, tax, and investment professionals for advice.

IRA Financial is not engaged in rendering legal, accounting or other professional services. If legal advice or other professional assistance is required, the services of a competent professional person should be sought. (From a Declaration of Principles jointly adopted by a Committee of the American Bar Association & a Committee of Publishers and Associations.). The scope of Professional Services does not include the costs of any custodian related services.

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New SEP & 401(k) Roth Rules for 2023: What You Need to Know

As we approach the new year, it’s essential to stay updated with the latest changes in retirement plans. For 2023, there are some exciting developments in the SEP (Simplified Employee Pension) and 401(k) Roth rules that could significantly impact your retirement savings strategy. Let’s delve into these changes and understand how they may affect you.

1. Enhanced Contribution Limits:
One of the most significant changes for 2023 is the increased contribution limits in both SEP and 401(k) Roth plans. Under the new rules, employees can contribute up to $61,000 towards their SEP accounts, a $1,000 increase from the previous year. For 401(k) Roth plans, individuals can now contribute up to $20,500, up from $19,500 in 2022. These higher limits provide an opportunity for individuals to save more for retirement and maximize the tax advantages these plans offer.

2. Catch-up Contributions:
If you’re aged 50 or older, the catch-up contribution provision can boost your retirement savings. In 2023, individuals in SEP plans will be allowed to contribute an additional $6,500, up from $6,000 in the previous year. Similarly, for 401(k) Roth plans, individuals can make catch-up contributions of $6,500, compared to $6,000 in 2022. This increase in catch-up contributions is particularly beneficial for those approaching retirement age, as it provides an additional opportunity to increase their retirement nest egg.

3. Roth IRA Conversion Eligibility:
The new rules for 2023 have expanded the eligibility criteria for Roth IRA conversions. Traditionally, individuals with a modified adjusted gross income (MAGI) exceeding $100,000 were barred from converting their traditional IRAs to Roth IRAs. However, starting in 2023, this income limit has been eliminated, enabling high-income earners to convert their traditional IRAs into Roth IRAs, thereby taking advantage of potential tax-free growth and tax-free withdrawals in retirement.

4. Non-Discrimination Testing Relief:
For small businesses with SEP plans, non-discrimination testing has often been a burdensome requirement. However, the new rules provide relief by easing non-discrimination testing requirements for certain eligible employers. This change is aimed at encouraging more small businesses to adopt SEP plans, benefiting both employers and employees alike.

5. RMD Changes:
Required Minimum Distributions (RMDs) from retirement plans are one aspect that often catches retirees by surprise. However, in 2023, there have been no major changes to RMD requirements for SEP or 401(k) Roth plans. It’s crucial to understand the RMD rules and ensure compliance to avoid penalties, especially if you’re approaching the age of 72, when RMDs generally begin.

As with any changes in retirement plan rules, it’s advisable to consult with a financial advisor or tax professional to understand how these adjustments specifically apply to your situation. Reviewing your retirement strategy in light of these new rules can help you make informed decisions that align with your long-term financial goals.

In conclusion, the new SEP and 401(k) Roth rules for 2023 offer increased contribution limits, expanded eligibility for Roth IRA conversions, and relief from non-discrimination testing for certain small businesses. Stay informed, take advantage of these opportunities, and ensure that your retirement savings plan remains aligned with your financial objectives.