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Avraham "AY"  Rappaport, CLTC

President, Financial Professional

 

Yaniv "Jay" Natanov

President, Financial Planner

 

Eli Rappaport

Vice President, Financial Planner

 

Shlomo Rosenstein

Financial Professional

 

Ozzie Marizan

Financial Planner

 

Joseph Greer

Employee Benefits Administrator

 

Dylan Pinsky

Client Relations Manager

 

Premier Financial

6395 Dobbin Road, Suite 102

Columbia, MD 21045

 

Phone:  240-309-6001

 

Email: dylan.pinsky@prudential.com

Website: premierfinancial1.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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Premier Financial is not affiliated with Prudential Financial. Premier Financial sells insurance products of Prudential Financial's affiliated insurance companies in addition to products of non-affiliated insurance companies. Premier Financial is authorized to sell and service certain insurance products of Prudential Financial companies as well as use this material. Premier Financial and its representatives do not give tax or legal advice. Please consult with your own advisors regarding your particular situation. Offering financial planning and investment advisory services and programs through Pruco Securities, LLC (Pruco), under the marketing name Prudential Financial Planning Services (PFPS), pursuant to a separate client agreement. Offering insurance and securities products and services as a registered representative of Pruco, and an agent of issuing insurance companies. 1-800-778-2255. Dylan Pinsky is employed by Eli Rappaport and not The Prudential Insurance Company of America or its subsidiaries.
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