Below are some highlights of new legislation passed on December 29,2022, which is commonly referred to as “SECURE Act 2.0”.  The legislation provides a slate of changes that could help strengthen the retirement system—and Americans’ financial readiness for retirement.

While the Act signed into law is quite extensive and contains dozens of provisions, here are 5 of the highlights that pertain to your Providence Association IRA, both traditional and Roth.

1. The age to start taking RMDs increases to age 73 in 2023 and to 75 in 2033. Depending on your date of birth, the RMD age is increasing as follows; if you are born:
   • Before January 1, 1951, your RMDs have already started, and nothing changes
   • Between January 1, 1951 and December 31, 1959, then your RMDs must start after reaching age 73
   • After January 1, 1960, then your RMDs must start after reaching age 75
2. The penalty for failing to take an RMD will decrease from 50% to 25% of the RMD amount, and to 10% if corrected in a timely manner for IRAs.
3. Catch-up contributions will increase in 2025 for IRA account holders.
4. Qualified Charitable Distributions (QCDs) Beginning in 2023, people who are age 70½ and older may elect as part of their QCD limit a one-time gift up to $50,000, adjusted annually for inflation, to a charitable remainder unitrust, a charitable remainder annuity trust, or a charitable gift annuity. This is an expansion of the type of charity, or charities, that can receive a QCD. This amount counts toward the annual RMD, if applicable. Note, for gifts to count, they must come directly from an IRA by the end of the calendar year. QCDs cannot be made to all charities.
5. We remind you that prior legislation eliminates the retirement contribution age limit, previously set at 70 ½.  

The Providence Association will monitor any changes and adjust our operations in accord with the new legislation.   However, we strongly encourage our members to contact their tax professional to determine how these changes can impact your personal retirement savings and distributions. The Providence Association cannot provide any tax or legal guidance. 

As Always, we thank you for your support and welcome your calls and emails.