Breaking down changes to the SECURE 2.0 Act
There are some changes when it comes to retirement planning thanks to the SECURE 2.0 Act.
Michelle Buria, a certified financial planner and Senior Director from Choreo, breaks it all down for us.
Secure stands for Setting Every Community Up for Retirement Enactment.
“This all has to do with retirement planning,” she explained. “2.0 just passed in December, and there are more than 100 different revisions.”
Here a few points she made.
“When you reach a certain age, you have to take out a minimum amount, Required Minimum Distribution or RMD for short. In the past it was 70 and a half. Now it’s changed to birth years. If you were born in 1950 or earlier, you are taking your RMDs now and you still have to take them going forward. If you were born 1951 to 1959, your RMD age is age 73. And if you’re born in 1960 or later, it’s age 75.”
If you do not take your RMD on time, you had a 50% penalty. That has been reduced to 25% in 2.0, per Buria.
If you have a work 401K, and you have a company match, the employer in the past had to contribute to a traditional side 401K. They can now contribute to a Roth IRA.
Sole proprietors, if you want to start a plan, you should do it sooner rather than later.
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