President Biden signed the Consolidated Appropriations Act of 2023 on December 23, 2022. Tucked away in this bills is SECUR 2.0 which mainly impacts qualified plans including 401k plans such as solo 401k plans for the self-employed, and most of the bills provisions don’t go into effect until 2024.
For the main items found in SECURE 2.0 that impact employer plans including the solo 401k , VISIT HERE.
Impact of SECURE 2.O on Self-Directed IRAs
Required Minimum Distributions
While those who were already subject to RMDs in 2022 and prior years must continue making RMDs pursuant to the prior RMD rules, starting in 2023 the RMD age will increase to 73 and to 75 in on January 1, 2033.
Missed RMD Penalties
The penalty for missing an IRA required minimum distribution (RMD) is reduced from 50% to 25% and to 10% if timely corrected..
Qualified Charitable Distributions (QCD)
Qualified charitable distributions do not apply to 401k plans including solo 401k plans. However, the do apply to IRAs. Beginning in 2023, SECURE 2.0 permits a one-time $50,000 qualified charitable distribution (QCD) from your IRA to a charitable gift annuity, charitable remainder unitrust, or a charitable remainder annuity trust. Also, starting in 2024 the IRA QCD annual $100,000 limited will be indexed for inflation.
IRA Catch-Up Contributions
Starting in 2023, an additional IRA catch-up contribution amount of $1,000 may be made which is indexed for inflation beginning in 2024.
Rollover of 529 Plans to Roth IRAs
Starting in 2024, 529 college savings accounts may be directly rolled over to Roth IRAs. The total amount that may be rolled over by the 529 beneficiary is $35,000 to his or her Roth IRA which is aggregated over their lifetime. However, the Roth IRA annual contribution limits will impact this permitted rollover amount, and the 529 account must have been established for more than 15 years.
ROTH Contributions to SEP IRAs and SIMPLE IRAs
Starting in 2023, Roth contributions can be made to SEP IRAs and SIMPLE IRAs.
