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Central Markets by Robert Lloyd, CFA

The information contained herein has been obtained from sources believed to be reliable, but the accuracy of the  information cannot be guaranteed. All opinions and outlooks are subject to change.

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Important retirement plan changes in the recent Omnibus bill

Increased Required Minimum Distribution (RMD) Age


The first SECURE Act passed in 2019 increased the RMD age to 72. The SECURE Act 2.0

raises those ages again in 2 stages. Starting January 1st of 2023, the RMD age increases to

73. For those born after 1950 it is increased to 75 beginning in 2033.


529-to-Roth Rollovers


One of the questions many diligent savers have regarding 529 plans is what to do with

unused funds. After beneficiaries complete their withdrawals, the typical 529 account is

liquidated and becomes after-tax investment capital of the account's owner. The SECURE

Act 2.0 will allow 529 plan beneficiaries to make rollovers of up to $35,000 from 529

accounts into their Roth IRAs.


The rollover amount is limited each year to the Roth IRA contribution limits, meaning it

would take several years of rollovers to exhaust the $35,000 lifetime limit. Nonetheless,

this opens the door to a tax-friendly alternative to traditional strategies for unused 529

savings.


New Emergency Savings Accounts


Finally, Congress is allowing the creation of a new type of savings account for retirement

savers. In an effort to address the tendency of individuals to rely on retirement savings for

emergency expenses, a new type of emergency savings account will be allowed in which

employees can make 4 withdrawals each year without any penalty. Annual contributions

are capped at $2,500, and when leaving employment the employee may roll these

emergency savings accounts into a Roth IRA.


IRA Catch-Up limit increases


The IRS allows those in their final working years to make extra contributions to retirement

accounts known as “catch-up” contributions. Typically, every few years Congress will

increase the catch-up limit to adjust for inflation, but the SECURE Act 2.0 will let the

catch-up limit increase with inflation automatically each year without requiring extra

legislation from Congress. Additionally, those turning age 60-63 years old in 2025 will

have the catch-up limits on their employer sponsored retirement plans increased from

$6,500 to $10,000.


Robert Lloyd, CFA®

Chief Investment Officer

Lloyds Intrepid Wealth Management

Lloyds Intrepid LLC is doing business as Lloyds Intrepid Wealth Management. Lloyds Intrepid LLC offers investment advisory services in the State of Texas where registered and in other jurisdictions where exempted. Registration does not imply a certain level of skill or training. Lloyds Intrepid LLC and its advisers do not provide legal, tax or accounting advice. Lloyds Intrepid LLC formulates retirement plans, investment strategies, portfolio construction and investment due diligence for clients with signed investment advisory agreements with us. The information contained herein has been obtained from sources believed to be reliable, but the accuracy of the information cannot be guaranteed. All opinions and outlooks are subject to change.


© 2023 Lloyds Intrepid LLC


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