The new year is upon us, and we at Bona Fide are preparing to stay busy for the rest of the year, helping our clients succeed in all aspects of their lives. This newsletter will provide you with some context surrounding tax-loss harvesting, and what that means when investing. But first, a word from our sponsor…
The Setting Every Community Up for Retirement Enhancement (SECURE) Act passed in December 2019, and nearly three years later, the U.S. House of Representatives, on December 23, 2022, passed the Consolidated Appropriations Act of 2023. This $1.7 trillion dollar package has been making its way through the House and Senate for over two years. Although many details are still unknown, it’s assumed that it will include aspects of components that have already been passed in the House and made it out of committee in the Senate. These changes would help those saving for retirement immensely, but won’t impact the nearly half of Americans who aren’t saving anything for retirement in the first place.
This legislation also includes Roth-related changes. The good news is that these changes do not eliminate strategies that are already in place, such as backdoor Roth conversions. Watch/listen along as Adam Bergman, retirement expert, explains the major impacting factors. Some changes include aligning the rules for employer-retirement-plan-based Roth accounts (e.g., Roth 401(k) and Roth 403(b) plans) with those for individual Roth IRAs by eliminating RMDs, creating a Roth-style version of SEP and SIMPLE IRA accounts, allowing employers to make matching contributions and non-elective contributions to the Roth side of the retirement plan instead of just the pre-tax portion (though participants will be subject to income tax on such contributions), and allowing for transfers from 529 plans to Roth IRAs (with significant restrictions). Overall, this should allow retirement savings to be more straightforward and offered to a wider range of people. Michael Kitces of Nerd’s Eye View details the impacts of The Secure Act 2.0 in this article. The ‘What’s Next?’ Retirement Podcast outlines the major changes in this episode.