YOUR MONEY
7 Under-the-Radar Tax Changes
They’ll help you keep more of your hard-earned retirement nest egg. ::
BY DANIELLE BRAFF
A 1
major tax law was signed into law in December of 2022 — the SECURE Act 2.0 — and
buried in the fine print are all kinds of new goodies that retirement savers may be missing out on, even now, more than a year after it was passed. Here are seven changes that may
really benefit you.
THE REQUIRED MINIMUM DISTRIBUTION AGE IS OLDER
Thanks to the SECURE Act 2.0, the age you must begin taking required minimum distributions from qualified tax-deferred retirement accounts such as 401(k)s, 403(b)s, and traditional individual retirement accounts (IRAs) goes from 72 to 73. So, you get a little longer to grow
your nest egg on a tax-deferred basis versus getting taxed on those forced withdrawals. Unfortunately, this won’t help you if you’ve already started taking distributions. If you turned 73 in 2023,
MONEY MATTERS
RETIREMENT BOOST The IRS is raising the limit on
how much you can sock away in your retirement accounts. Here are the new contribution limits for IRAs, 401(k)s, and other qualified savings accounts for 2024: Both traditional and Roth IRA
contribution limits are $7,000 for those under 50, up from $6,500 in 2023. If you’re over 50, you can take advantage of
you must take your RMD on or before April 1, 2024. And each of your next distributions must be made by Dec. 31 of each year thereafter.
2
NO MORE RMD REQUIREMENTS FOR
EMPLOYER-SPONSORED ROTH ACCOUNTS In the past, Roth 401(k)s were treated like regular 401(k)s, but starting in 2024, these accounts will have the same rules as Roth IRAs. If you had planned to rollover your
Roth 401(k) to your Roth IRA to avoid RMDs, you no longer have to do that. But in reality, it’s still a good idea to rollover a Roth 401(k) to a Roth IRA because it gives you more control and freedom.
3
NO PENALTY IF YOU MISSED YOUR RMD
Missing your RMD used to be a very expensive mistake. If you didn’t withdraw the full amount or take a distribution by the yearly deadline, the IRS assessed a penalty of 50% of the amount you were supposed to withdraw.
an additional $1,000 catch-up contribution. The income limit for making the full tax-deductible contribution (either $7,000 or $8,000, depending on your age) to a traditional IRA is now $77,000 for singles. For married couples filing jointly: If the spouse making the contribution is covered by a plan at work, married couples
78 NEWSMAX MAXLIFE | FEBRUARY 2024
The new law reduces that penalty to
25%, and if you quickly fix your mistake and refile your taxes within two years, the IRS will drop the penalty to 10%. Plus, if you can prove that you
didn’t withdraw the RMD “due to reasonable error, and that reasonable steps are being taken,” the IRS can choose to waive the penalties completely.
4
YOUR 529 PLAN MAY BE ROLLED INTO ROTH IRA
The so-called “529 plans” are a great, tax-advantaged way to save for college. But what if the recipient decides to take a different life path or gets a scholarship to pay for school? This tax change, which starts in 2024, allows up to $35,000 of
must earn less than $123,000 to make the full contribution. But if neither person is covered by a qualified workplace retirement plan, the income limit is $230,000 for a full, per person contribution.
TAX BRACKETS The IRS adjusts tax brackets,
standard deductions, and other tax breaks annually based on
inflation. For 2024, the top tax rate is still 37% for single taxpayers earning more than $609,350 and married joint filers earning more than $731,200. Here are the other brackets: 35% for singles earning over
$243,725 ($487,450 for married couples filing jointly) 32% for singles earning over
$191,950 ($383,900 for joint filers)
DNY59©ISTOCK
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