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Retirement Plan

Does the Secure Act 2.0

Affect Your Retirement Planning?

by Richard (Rick) Childress, CIMA , CRPC .
®
®
First Vice President. PIM Portfolio Manager
®
ou may want to review your To qualify, the 529 account must have been in existence
retirement planning strategies for at least 15 years and the amount rolled over to the Roth
Ybecause of key provisions in the IRA may not exceed the aggregate amount contributed (plus
SECURE Act 2.0, which was signed earnings) before the five-year period ending on the transfer date.
into law in December 2022. Will you get credit for your student loan payments?
Currently effective If you are paying off qualified student loans, your employer
Do you need to take required has the option to match your loan payments with contributions
distributions from your retirement to a retirement account, offering you an additional incentive to
accounts? save for retirement. For this purpose, matching contributions
The act increased the required can be made into a 401(k), 403(b), governmental 457(b), or
minimum distribution (RMD) age SIMPLE IRA plan if your employer chooses to offer this
to 73. The RMD age is scheduled to feature.
increase to 75 in 2033. Should you take advantage of employer-sponsored emergency
Does making qualified charitable savings accounts linked to individual account plans?
distributions (QCDs) make sense? Your company has the option to automatically sign you up
QCDs are available to those age 70½ or older and have a for an emergency savings account for up to 3% of your salary
Traditional IRA and/or Traditional Inherited IRA. Now you or up to $2,500, indexed for inflation, to your retirement
may distribute a one-time $53,000 QCD paid directly from plan if you earn less than a certain amount of money. These
your IRA to certain split-interest entities that qualify. The contributions can be made on an after-tax basis with the
distribution will be considered part of the $105,000 QCD potential for an employee match. If your company participates,
annual limit (both amounts are adjusted for inflation). The you are allowed at least one withdrawal per month and the first
rules governing which split-interest entities are allowed to four withdrawals in a year cannot be subject to any plan fees.
receive the one-time $53,000 amount are complex, so consult Starting January 1, 2025
a planning or philanthropic specialist who can provide more Should you take advantage of higher retirement catch-up
information. contributions?
Should you direct employer matching contributions to Currently, if you’re age 50 or older and want to increase your
your before-tax qualified retirement plan (QRP) account or tax-advantaged retirement savings, you can make an additional
designated Roth account? $8,000 contribution annually to your QRP and $3,500 to a
Your employer may now offer you the option to receive SIMPLE IRA.
vested matching contributions in a QRP designated Roth Beginning in 2025, if you’re aged 60 – 63, you will be able
account instead of a QRP before-tax salary deferral account. to increase that amount to the greater of $10,000, indexed for
Contributions to a designated Roth account are made with inflation, ($5,000, indexed for inflation, for a SIMPLE IRA) or
after-tax dollars and qualified distributions are tax-free. 150% of your catch-up contributions for the year.
Should you delay taking distributions from a designated Beginning in tax years after December 31, 2025, if your
Roth account? wages exceed $145,000 in the preceding calendar year, indexed
Previously, if you had a Roth IRA, you were not required for inflation, you will be required to make your catch-up
to take RMDs while you were alive, but you did have to take contributions to a designated Roth account.
them from a designated Roth account in a QRP. Now you no Wells Fargo & Company and its affiliates do not provide legal or tax advice. This communication
longer have to take RMDs from either type of Roth account. cannot be relied upon to avoid tax penalties. Please consult your tax and legal advisors to determine how
Would a 529 plan designated beneficiary get a head start on this information may apply to your own situation. Whether any planned tax result is realized by you
depends on the specific facts of your own situation at the time your tax return is filed.
saving for retirement by transferring their unused balance to a This article was written by Wells Fargo Advisors Financial Network and provided courtesy of
Roth IRA? Richard, Childress CIMA®, CRPC®, PIM® Portfolio Manager, First Vice President in Naples at
239.264.1000
A 529 plan designated beneficiary may be eligible to have [If there is a charge to publish, produce, or distribute an article, use the following disclosure instead
a direct rollover contribution made on their behalf from their of the above:]
529 plan to a Roth IRA, if certain conditions are met (state This advertisement was written by Wells Fargo Advisors Financial Network and provided to you
by Richard, Childress CIMA®, CRPC®, PIM® Portfolio Manager, First Vice President
laws may vary). Distributions are subject to annual Roth Investment products and services are offered through Wells Fargo Advisors Financial Network,
contribution limits, the 529 beneficiary must have equivalent LLC (WFAFN), Member SIPC. Agape Wealth Partners of Edwards Asset Management is a separate
earned compensation, and the aggregate distributions are entity from WFAFN.
©2024 Wells Fargo Advisors Financial Network, LLC. All rights reserved.
limited to a $35,000 lifetime amount. First Clearing is a trade name used by Wells Fargo Clearing Services, LLC, Member SIPC, a
registered broker-dealer and non-bank affiliate of Wells Fargo & Company.
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