2023 Tax Law Highlights

---

SECURE 2.0 Act: Will It Affect You?¹

SECURE 2.0, the sequel to the SECURE Act of 2019, offers more options for people, including those approaching retirement and those with student-loan debt, to save more for their retirement. There are also opportunities for those who are charitably minded.

Rarely does legislation get a follow-up—much less more benefits—for a larger portion of Americans. But this is the case with the SECURE 2.0 Act of 2022, passed by Congress on December 23 and signed by President Biden December 29, 2022.

The new law provides additional benefits for both the workforce and retirees. The provisions can also enable generous givers to be more charitable while lowering taxes. You could be one of many who benefit now.

Background on SECURE 2.0

SECURE 2.0 is the successor to the Setting Every Community Up for Retirement Enhancement Act – sometimes referred to as SECURE 1.0—which was enacted in 2019. That law focused on broadening the access to tax-advantaged accounts, among other impacts to retirement planning.

Shortly after passing SECURE 1.0, Congress began work on SECURE 2.0, but it was delayed in the legislature. The House passed a version in March 2022, while the Senate sought to align with its own changes for much of the year. They finally came to an agreement in late 2022.

Key Provisions 

1. Required minimum distributions²

SECURE 1.0 boosted the required minimum distribution (RMD) to age 72; SECURE 2.0 boosts it up again—first to 73, then to 75, depending on your birth date. The new legislation also reduces the penalty, currently 50%, for failing to take an RMD down to 25%. “These changes could be welcome news for our retirees who may find that their RMD could put them in a higher tax bracket than they initially planned for,” says Heather Winston, a senior planning-solutions director for Principal^®. [Editor’s note: This is also when one can begin to consider using IRA funds for charitable purposes.] 

2. Part-time work and retirement³

Some savings plans are not available to those who work part time, but SECURE 2.0 provides that for anyone who works between 500 and 999 hours each year for two consecutive years to be eligible to enroll in their company’s retirement plan.

3. Traditional IRA Rollover⁴

The SECURE 2.0 Act created a new charitable gift opportunity. Donors can now roll over a traditional IRA into a charitable gift annuity (CGA), a standard unitrust or an annuity trust. This is a creative new opportunity because many business owners over age 70½ have a traditional IRA. [Editor’s note, This is a one-time $50,000 distribution from a person’s IRA to fund a CGA. Consult your tax advisor to see if this is a good option for you.]

Other Provisions

Catch-up contributions (available to people ages 60-63) are increased by SECURE 2.0).

1. Auto-enrollment in employer-sponsored retirement plans.
2. Emergency savings (allows employers to offer savings accounts).
3. 529 rollovers to Roth IRAs.
4. Student-loan debt payments.

More SECURE 2.0 Provisions

The list is long and includes things such as additional options for minimal rollovers, donations to charities from retirement plans and a national clearinghouse for those who may have lost track of retirement savings they once had. Seek counsel first from your financial-planning specialist and/or a tax advisor. Additional information is available online.

The provisions in SECURE 2.0 affect many Americans, from those decades from retirement to those beginning or in retirement. Consult your tax-planning professionals to assess the impact on you and your unique situation. 

This material is intended only for educational purposes not to be taken as a recommendation. Our team of charitable planning specialists with Cru^® Foundation can come alongside your team of advisors and help ensure that you are stewarding well all that God has entrusted to you. You can reach out to them today at: [email protected] or call toll-free 800-449-5454.

Our Cru Foundation has prepared a list of those opportunities with potential solutions that can enable you to better steward your God-given resources.  To see the 2023 options and how you might benefit, click here now.  

Cru^® and its employees do not provide tax or legal advice. Ministry donors should consult with an attorney or qualified tax advisor about their situation.

¹ Content adapted from post 01.03.2023 on Principle.com

² Ibid.

³ Ibid.

⁴ Charles Schultz, JD, AEP® 02.23.2023, CrescendoInteractive.com