New RMD Change to Age 75?? - Secure Act 2.0 - YouTube

Hi there. It's Anthony and Alex.

Today we're discussing Secure Act 2.0, some of the biggest highlights

that are affecting those in or near retirement, if you like.

Today's content please like and share

All right, Alex.

So the bill was recently passed

in the House of Representatives by a wide bipartisan margin.

This is important and is now being reviewed in the Senate

when we're talking about secure act 2.0 here.

Yeah.

Now there are over 50 proposal retirement proposals in this bill

but really what we're going to focus on, at least right now, is the discussion of

are the at least

the proposal of pushing back the required minimum distribution age to 75.

Yeah.

Real quickly so let's explain what an RMD is required minimum distribution retirees

when they hit a certain age need to pull out a certain amount

from their retirement accounts which becomes taxable income to them.

Yeah and a lot of folks might be to like didn't we just have this change

which we did so the R&D the age when secure act in 2020 was passed

that got bumped up from 70 and a half to seven to 72.

So there there have been a lot of changes recently

and if this proposal goes through again we're going to be bumping up from 70

and a half to 72 now all the way up to 75 for some folks.

Now the good news is

that this won't change anything for people that are already taking RMDs

so if you already taken R&D, there is no change but

it will have an impact for people that haven't started.

So we're going to put this up on the screen so everyone can see this

really what we're looking at here is three groups of people.

So in the first group you have people that were born between 1951 and 1956.

They will have their arm the age pushed to 73.

Those that were born between 1957

and 1958 will have their R&D push to 74,

and those that were born after 1959

will have their R&D age pushed to 75.

So again, what this is going to allow people to do is to continue to defer

taking required minimum distributions from their account.

Probably the only thing I like about this is that we don't have to deal with

half ages.

I never like that 70 and a half right issue so.

Well and it's, it's interesting how they come up with these age bands.

I don't know that anyone will actually know,

but it is important to get right

because there's a big penalty for not taking the proper RMD.

So we definitely want to avoid that big penalty to not take out enough.

And you also don't want to take out more than you need to. Yeah.

You don't want to pay taxes on that if you don't need the withdrawal.

Definitely in many cases.

All right.

So the next thing is indexing qualified charitable distributions,

the maximum amount.

This is one of our favorite strategies indexing it for inflation.

Yeah, exactly.

Now, again, sticking a step back,

what is the qualified charitable distribution?

Often abbreviated Q, C, D, essentially what it allows you to do is give money

directly from your IRA account to a qualified charity.

And this is a great tool, is a great way to give tax efficiently

Now, under the current rule, folks can give up to $100,000

in a given year to any amount of charities of their choice

Now, what this will do under the proposal, if it's passed in 20, 23,

that $100,000 will start to be indexed for inflation.

Okay. And the reason we like this strategy quite a bit.

We'll post previous content that we have is because it's very efficient

from a tax standpoint to give out of a retirement account.

You got to.

All right.

So next thing is increasing the catch

up contributions for employer retirement plans and IRAs.

You got it.

So in 2022 folks can give up to $6,000

or I'm sorry not give contribute up to $6,000 into their IRA or Roth IRA

and then if they're age 50 and above they can contribute an additional $1,000.

Now what's happened is right now that Thousand-dollar catch up

is not indexed for inflation. Right.

Our tax code is written in such a way where our tax brackets in those

those amounts will go up over over

time, increasing cost of living adjustments, etc.

Right now it's not indexed for inflation.

But if this bill is passed starting in 20, 23,

that $1,000 catch up will be indexed for inflation.

The bigger piece, I'd argue, is that there's going to be

an increase in up contributions for folks with retirement plans that work

specifically things like a 41 K or 403 B or four 57

and we'll put this picture on the screen so people can follow along.

Right now folks that are at least age

50 can contribute an additional 60 $500

as a catch up into their retirement plan like a 41 K.

Under this new proposal,

it's almost going to be like a catch up to the catch up.

So what folks can do is between ages 62 and 64,

their catch up contribution will be bumped up to $10,000

and this is a nice benefit for folks, you know,

especially as you get closer to retirement.

You want to boost up that savings right before you retire.

This can be a nice benefit in the way it's written is that that will indexed

with inflation which means there's these automatic increases built into the bill.

And I want to remind folks, I mean, this is

this is just a proposal at this point.

This still has to go through the Senate.

But as it's looking right now, it's still good to know this information,

maybe plan ahead. No, what's coming?

So you don't get surprised along the way. Yeah.

So definitely stay tuned. Watch as it goes through.

If it gets if it gets passed and we just covered three big highlights.

Jamie Hopkins did a nice Two-Minute video on ten highlights, which we'll also post.

And we found a lot of value in that as well.

And now let us know what you think.

How do you feel about the R&D age being pushed back to age 75.

Leave your comments down below.

And if you like this content, please like and subscribe for more.

Thanks for watching.