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Tom Meaglia, ChFC®, AEP®,

CLU®, CRPC®, MSFS

Chartered Financial Consultant

Investment Advisor Representative

Chartered Retirement Planning Counselor

CA Insurance Lic. #0567507

 

Meaglia Financial Consulting

2105 Foothill Blvd., #B140, La Verne, CA 91750

 

Toll Free: 800-386-3700

Bus:         909-593-6105

Cell:         818-681-8600

Fax:         909-593-6120

 

Email: tom@meagliafinancialconsulting.com

Website: www.meagliafinancialconsulting.com

July/August 2023

Secure Act 2.0: Boosting Retirement Readiness

Secure Act 20 Boosting Retirement Readiness

The Secure 2.0 Act of 2022 expands some provisions contained in previous versions of the Act and adds some new ones. The goal is to make saving for the future easier.


New Age for RMDs
The Act raises the age for taking required minimum distributions (RMDs) from qualified retirement plan accounts. As of January 2023, the age for beginning withdrawals from 401(k) and similar plans is 73, increasing to age 75 in 2033. Delaying RMDs allows more time for money to remain in retirement accounts tax deferred.

Disadvantages of Later Withdrawals
RMD amounts are based on the account balance at the end of the prior year and the account owner’s life expectancy. Delaying RMDs may mean a retiree will have to take larger distributions based on a larger account balance, potentially moving the retiree into a higher tax bracket. The additional income could also increase Medicare Parts B and D premiums and subject more of a person’s Social Security benefits to taxation.


Lower Penalties
Penalties for failing to take an RMD are reduced from 50% to 25% of the amount not taken. The penalty is further reduced to 10% if the failure to take the required amount is corrected in a timely manner.


Catch-up Changes
After December 2023, catch-up contributions for plan participants ages 50 and older will be indexed to IRS cost-of-living adjustments (COLA). In 2025, catch-up limits for 401(k) participants ages 60 to 63 will increase to the greater of $10,000 or 150% of the regular catch-up amount. After 2025, the catch-up amount will be indexed for inflation.


Emergency Withdrawals
Beginning in 2025, participants can access up to $1,000 annually from their retirement savings without penalty for emergency expenses. The participant may repay the distribution within three years, but cannot take additional distributions during that time, unless the distribution has been fully repaid. Victims of a federally declared natural disaster can withdraw up to $22,000 from retirement accounts penalty free for disasters that occurred after January 25, 2021.


Automatic Enrollment
In 2025, employers with new 401(k) and 403(b) plans will be required to automatically enroll eligible new employees in the plan. Employees can then choose to opt out of the plan.


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Thomas Meaglia is an Investment Adviser Representative of Coppell Advisory Solutions LLC, dba, Fusion Capital Management, a registered investment adviser that only conducts business in jurisdictions where it is properly registered, or is excluded or exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. The firm is not engaged in the practice of law or accounting.
Insurance and annuity products are not sold through Fusion Capital Management. Fusion does not endorse any annuity or insurance product, nor does it guarantee any insurance or annuity performance. Annuity and life insurance guarantees are subject to the claims-paying ability of the issuing insurance company. If you withdraw money from or surrender your contract within a certain time after investing, the insurance company may assess a surrender charge. Withdrawals may be subject to tax penalties and income taxes. Persons selling annuities and other insurance products receive compensation for these transactions. These commissions are separate and distinct from Fusion's investment advisory fees.
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