As a special Christmas present to all of us, the Secure Act 2.0 is expected to become law right before the holiday. The SECURE Act 2.0 caught a ride on the $1.7 trillion omnibus spending bill that was unveiled on December 19. While the bill presents numerous changes to existing retirement savings and withdrawal rules, as my present to you, I’ve jumped right in to analyzing what the sweeping changes mean for your Roth IRAs in particular. Roth IRAs are good tools for various reasons. As I’ve written in the past, they are underutilized retirement savings and investment vehicles that offer a number of tax and liquidity benefits. They are also a valuable tool for people who don’t have access to an employer-sponsored retirement plan, which is roughly half of private sector employees ages 18 to 64, according to AARP. I’ll dive into the provisions in the Secure Act 2.0 that will impact Roth accounts and whether they are positive, negative, mixed, or neutral. Current law has RMD age set at 72. The Secure Act 2.0 would move the required minimum distribution age to 73 for anyone reaching this age in 2023. If you reached age 72 in 2022 you are subject to the age 72 RMD. And then on January 1, 2033, the applicable required beginning date age will be 75. My rating on this provision, which goes into effect in 2023 and 2033, is neutral. Most people will not be impacted by it because most people are already taking out more than their RMD at 72. Nearly 80% of people took out more than their RMD at age 70.5 and it’s likely that fewer than 20% that take RMD only at 72. This number would drop even more by age 73 and even further by age 75. This provision mostly impacts people with wealth who don’t need their RMD and can leave the money to grow. So you might be asking why did I include this with a Roth article? Because of Roth conversion planning opportunities. Pushing back the RMD age gives people more flexibility over when to spend their money, more planning opportunities for Roth conversions, and an increased ability to design smart spending strategies from their taxable retirement accounts. The best time to do Roth conversions is often after you’ve retired when taxable income drops and before RMDs are due. While you can do a Roth conversion after RMDs are due, you need to do conversion above and beyond what you owe that year for RMDs, often increasing your taxes. Instead, look for low tax rate years where you can do some conversion from a traditional IRA or retirement account to a Roth IRA or account and keep taxes low. Remember, if you want to convert money from a traditional IRA to a Roth, the amount you convert is typically included in taxable income if it was tax deferred money in the IRA. Additionally, to have that Roth conversion money show up on your tax return for the current year, it must be done by 12/31. SECURE Act 2.0 adds a new way to do a tax- and penalty-free rollover from a 529 account to a Roth IRA under certain conditions.

All data is taken from the source:
Article Link:

#roth #newsheadlines #newsworld #newsworldfox #cnnnewstoday #newstodayinusa #…(read more)

LEARN MORE ABOUT: IRA Accounts

INVESTING IN A GOLD IRA: Gold IRA Account

INVESTING IN A SILVER IRA: Silver IRA Account

REVEALED: Best Gold Backed IRA