There are a few “miscellaneous changes” that happened in the Secure 2.0 act that I will cover briefly here. As always, reach out to me for more information on any of these topics that I have covered.
First Required Minimum Distributions (RMD’s) under Secure 2.0. The RMD age was 70 ½ for as long as I have been in this business but now it is changed to age 73 if the participant attains age 72 after 12/31/2022. And then it increases RMD age to 75 for persons who attain age 74 after 12/31/2032.
Another change to RMD’s after 12/31/2024, is that Roth contributions will not be subject to RMD requirements effective after 12/31/2024. (Roth IRAs are currently exempt from RMD requirements, but Roth plans are not exempt.) There is also a change to the RMD excise tax for not taking the distribution timely. The excise tax is reduced to 25% and may reduce to 10% if the RMD shortfall is corrected during a two-year window.
There is also an increase to the cash out limit. The cash out limit is where an employer can force an employee out of the plan if they don’t make their own election. The cash out limit is increased from $5,000 to $7,000 effective after 12/31/2023. This is a good change, but I truly wish they would have increased it further. Sometimes it is so difficult to get employees to take their money out of the plan or to find them if years have gone by. What would be wrong with increasing it further since there are so many great companies that now accept these rollovers?
The final miscellaneous topic that I want to cover is the increased Catch up for ages 60 to 63. This is effective after 12/31/2024 and allows for an increased catch-up for 401(k), 403(b) and 457(b) plans equal to the greater of $10,000 or 50% more than the regular age 50 catch-up amount (indexed for inflation). Again, even though this is great…why didn’t they just make it be $10k (indexed) for anyone over age 60. I worry that the tracking of this limit could get extremely complicated!
