Understanding the Impact of the SECURE Act 2.0 on Retirement Planning and Estate Plans

The SECURE Act, passed in 2019, represents a significant shift in the landscape of retirement planning and estate management. Updated in 2022, with the passage of SECURE Act 2.0, this legislation aims to improve access to retirement savings and other key provisions. With changes such as raising the age required minimum distributions and altering the rules, it is essential to understand these adjustments, especially if you are looking to secure your financial future. Read on to learn the key takeaways of the SECURE Act 2.0 and how it affects your retirement plans and estate plans.

What are the major changes in the SECURE Act 2.0?

1. Changes to RMD

An impactful change to SECURE 2.0 introduced an adjustment to the Required Minimum Distributions. Previously, the RMDs were set at 72. Under SECURE 2.0, the age is increased to 73. This gives retirees more time to accumulate their tax-deferred investments. Additionally, in 2025 the RMD will rise to 75, allowing retirees even more time to grow their funds.

2. Clarifying the 10-year payout rule for inherited IRAs

Initially, the SECURE Act was not clear on the 10-year payout rule and whether the beneficiaries are to receive a minimum distribution every year or lump sums on certain years. After passing the SECURE Act 2.0, beneficiaries now must take out at least the required minimum distribution each year with the full payout by the tenth year.

3. 529 Rollovers to Roth IRA

The SECURE Act 2.0 also provids relief for unused 529 plans. These funds can now be rolled over into a Roth IRA without penalty. Prior this change, a 10% penalty was imposed and withdrawals taxed. Also, under SECURE 2.0, you can rollover up to $35,000 over your lifetime Roth IRA for a child or beneficiary, promising more use for long-term retirement savings.

4. Charitable Contributions

More importantly, the SECURE Act 2.0 allows a charitable remainder beneficiary without the loss of the lifetime stretch for the primary disabled beneficiary. Under the previous legislation, leaving retirement accounts to a charity could result in the loss of the lifetime stretch for disabled beneficiaries. Now, under SECURE 2.0, you can designate a charity as a remainder beneficiary without the stress of affecting the lifetime stretch. This is important for those who plan on leaving a legacy to loved ones and a charity.

Why You Need to Act Now

These major changes may require you to adjust your estate planning or retirement planning strategy. It’s essential to stay informed about these types of legislative changes as they can impact your future and financial goals.

Talk with a professional about your retirement accounts and estate plan today!

Kevin L. Miller, PC is an attorney in Oklahoma City, Oklahoma, specializing in estate planning, probate, and elder law for all Oklahomans.

Kevin has over 35 years experience in helping all kinds of individuals and families.

He says, “My commitment to you is to listen, to help you determine your needs and goals, and to develop an estate plan tailored to meet your particular circumstance. You will be provided with a high level of personal service with an attention to all the details.

You will experience personalized, professional service in a confidential, welcoming and comfortable environment.”

If you are ready to get started on your life or estate planning, call Kevin L. Miller, PC at (405) 443-5100.