Episode 46: Secure Act 2.0 Changes Summary

Welcome to the Wisdom and Wealth podcast. This week I break down some of the changes found inside the Secure Act 2.0. If you’d like more information, please email and ask for Jamie Hopkins whitepaper entitled: “The Complete Guide to the Secure 2.0 Act”. Thank you for listening! Please reach out with any comments or questions you may have. 

Josh Klooz, CFP®, MBA
Senior Wealth Planner

Phone 281.719.0036

Text 281.699.8691

Fax 281.719.0156

jklooz@carsonwealth.com

1780 Hughes Landing | Suite 570

The Woodlands, TX 77380 

Music by bensound.com

Please check out and subscribe to my Youtube Channel and Newsletter!

JOSH KLOOZ, CFP®, MBA
WEALTH ADVISOR

Phone 281.719.0036
Text 281.699.8691
Fax 281.719.0156
jklooz@carsonwealth.com

1780 Hughes Landing | Suite 570
The Woodlands, TX 77380

Music by bensound.com

Transcript

Joshua Klooz  0:01  
Welcome to the wisdom and wealth podcast, a series of conversations designed to equip our listeners with helpful insights necessary to simplify the critical decision points of life. We believe true wealth is the thing Money cannot buy, and death cannot take away. Furthermore, we also believe our calling is to enable others to fulfill their own. And to that end, we endeavour investment advisory services offered through CWM LLC, an SEC registered investment advisor. 

Welcome, again to another episode of wisdom and wealth. I'm Josh Klooz, the senior wealth planner for Carson wealth here in The Woodlands, Texas. As many of you may be aware, our congressional leaders before the end of the year decided to make some changes to the secure act. And so we within Carson, our very own, Jamie Hopkins has created a helpful summary of the I forget how many pages but it was well over 1000, as I recall, that were comprised the bill. And you can get a copy of that, if you reach out to me at info Houston. But my purposes today is I just want to take a brief moment and go over the let's look here, probably the we'll call it six most important changes that would affect our clients and neighbors going forward. And again, it's not inclusive, but this is just give you a taste of of what is inside the bill. 

So we'll go ahead and dive in. So the first thing that changed that probably affects most in our industry and, and our neighbors is going to be that they've increased the ketchup limit for saving and 401k plan or a retirement vehicle at your company. And it goes from 5000 to 10,000 or 50% more than the regular index for inflation catch up amount by 2025. So stay tuned. And that's going to be a, you know, a convoluted assessment. But end of the day, rather than having a $5,000 catch up. It's now $10,000. But the caveat here is it's for those ages 60 through 63. So don't don't get it backwards, that you know, hey, I can go, you know, at age 50. And, you know, double my catch up limit that is not on the table, it's just 60 to 63. Currently, I don't know why that is the case, as in anything that has to do with our current legislative process, don't start at Congress start at K street and ask the lobbying firms why that is the case. And that's probably your best starting point for understanding why something is the way it is. 

The RMD H has now changed to 73 as of January 1 of this year, so I'm sorry, if you turned 72 on before the clock struck midnight on December 31 2022, you're still you should have paid your RMD hopefully, because it's technically late. But you know, if you do turn 72 In this year, you now have an additional year to pay your RMD or to take out your RMD rather, so we still are waiting on the final portion of this bill. And I'm gonna get to that in here in a second. But the RMD age is we believe will go to 75 in 2033. Currently, though, there's a typo in the bill. So that has to be basically flushed out and changed in the editing process after the fact I'm not exactly sure how that happens. In order for this to be going to full effect. So we'll have to just wait while they iron that out. And if you want more on that, just stay tuned, I was about to make a bad joke about interns and editing the bill. 

But I want the next piece that we find that will probably affect a lot of folks, potentially is you now have the option to rollover up to $35,000 from your 529 plans to a Roth IRA. So the thought there is it's capped again at 35,000. But the other stipulation is that you have to have had the 529 plan for 15 years. So if you're a grandparent or a parent who you know when you know little Susie or little Timmy was like a month old and you started that 529 plan and now you know it's grown and it's created a large amount of money in there and you're not sure whether they're gonna be able to use it all or the you know the kids Question student question rather is, you know, has all scholarships and doesn't need it. This provides some alleviation of where those funds can go. Previously, if you spent anything out of the 529, for non education expenses, you know, non specified education expenses, you got penalized. So, it'd be a good change, and hopefully, we'll, you know, provide some level of relief, you know, rather than it being so stringent. 

The next piece, that change that people probably want to pay attention to is, there's no more forced RMDs from your Roth 401 KS or 403 B's. So previously, you had to roll over your 401 K, your Roth 401 K, or your Roth 403. B in order to an IRA in order to avoid those forced RMDs at RMD. Age. Now, you don't have to do that. Again, you know that it's probably obvious why this is the case, and you probably has to do with asset flows from large retirement plans to IRAs is probably the motivation behind this. But I'll leave that with you. There, as it were. Number five that I want to cover is that the bill now allows for 401 K plan participants to choose if their company match goes is counted pre tax, or it could go towards their Roth contribution. And obviously, you don't have to pay tax on that. But it now allows you to do that. And it doesn't. The caveat here is though, it does not force your employer to participate and offer this. So I asked her for Ask your your employer and your 401k provider, if this is something that they're going to change in the coming year. And again, you'd want to kind of think through your tax bracket, both today and in the future of whether that makes sense for you. 

The last thing that I want to cover is that QCDs are now going to be indexed for inflation. So it used to be that that you know, each year, you could contribute up to $100,000. And now that's going to go up with inflation. So hopefully that for those that have the ability to give that amount of money, hopefully that continues to increase their charitable inclination as time goes on. Again, as I mentioned, we have a helpful guide that will take you through even more detail and more high points of the bill. And if you would like that, please reach out to us at info Houston at Carson wealth.com And we can definitely get you a copy of that. As always, please reach out with any questions you have. And I would also like to ask that if you've appreciated this video, this podcast whichever your your, you know, however you're reaching us whether it's on your favorite podcast provider or it's on YouTube, please like the video if it if you would, if you agree and also subscribe to the channel, as well. Thank you again and Y'all have a great day. 

Well, that's all for today. Thank you again for joining us. We trust that you are better equipped to steward both your wealth and your financial resources. If you have questions or suggestions for future topic, please direct those to info Houston, Carson wealth.com. But you and your family uncover truth, beauty and goodness. 

The opinions voice in wisdom and wealth with Josh Klooz are for general information and are not intended to provide specific advice or recommendations for an individual as performance is no guarantee of future results. investing involves risk, including possible loss of principal. No strategy assures success or protects against loss to determine what may be appropriate for you. Consult with your attorney, accountant, financial or tax advisor prior to investing. Investment Advisory services offered through CWM LLC, an SEC registered investment advisor. Our address is 17 at Hughes landing, suite five, seven, The Woodlands Texas seven seven

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