The Secure Act 2.0 has been approved by Congress and is awaiting President Biden’s signature into law.

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There is late breaking tax & retirement planning news:

The Secure Act 2.0 has been approved by Congress and is awaiting President Biden’s signature into law.

This new law expands upon The Secure Act 1.0 which was approved in December of 2019. Some of the highlights are:

  • Extended the RMD age to age 73
  • Reduced the penalty for missing an RMD
  • Allows employer matching to the Roth
  • Increased the contribution to a QLAC
  • Increased retirement plan catch-up contributions for those age 60-63 in 2025
  • Allows a 529 to Roth IRA rollover starting in 2024
  • Creates Roth SEP IRA or SIMPLE IRA options

Allows for a $50,000 IRA Charitable Rollover to a Charitable Gift Annuity or Charitable Remainder Trust

How To Roll Over a Roth Thrift Savings Plan (TSP) to a Roth IRA

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Taking the wrong step could be costly.

Public sector workers with a Thrift Saving Plan (TSP) may be tempted to move their retirement funds elsewhere. TSPs, though generally great products, aren’t flawless and tend to lose their appeal once the participant’s days as a federal employee are over.
A popular option is to move accumulated capital into a separate individual retirement account (IRA). If your retirement contributions have already been taxed and are sitting in a Roth TSP, opening a Roth IRA, an account that also is funded with after-tax dollars, to house your savings can make a lot of sense. These accounts offer a wider selection of investment options and more flexible withdrawal rules, including the option to let your retirement money sit there for as long as you like.

In this article, we’ll talk you through how to move your retirement funds from a Roth TSP to a Roth IRA and flag the most important things to be aware of before proceeding. Click HERE to read more.

How Re-employment Affects Federal Retirement Benefits

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If you retired and are considering going back to work for the government, you could boost your annuity—perhaps substantially.

Unless you are one of the few who will be able to keep both your annuity and the full salary of your new position, what happens depends on whether your retirement was voluntary or involuntary and what retirement system you were in. If your retirement was voluntary, you’ll continue receiving your annuity; however, unless you are allowed to draw both fully, your salary for the new job will be offset by the amount of your annuity. If you work part time, the reduction will be proportional.

In general, the annuity of a retiree stops if he or she was involuntarily separated and the new position is permanent in nature, for example a career, career conditional or excepted service appointment. If that’s the case for you, when you go back to work you’ll have the same status as any other federal employee in an equivalent position and with a similar service history. In other words, you’ll pick up where you left off. When you leave government again, your annuity will be reinstated unless you are entitled to either an immediate or a deferred annuity based on the new separation. Click HERE to read full article

Naming Minor Children as IRA Beneficiaries

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A traditional IRA or a Roth IRA owner can name any adult as their IRA beneficiary. The IRS owner simply names an adult on the IRA beneficiary form. But this is not the case if the IRA owner wants to name a minor as beneficiary. When a minor inherits retirement dollars, the child is not legally able to make decisions with regard to finances. Some type of custodian or guardian will be needed. A potential problem is that not all IRA beneficiary forms allow nomination of a guardian.

Another option is to name a custodial account for the minor on the IRA beneficiary form. Custodial accounts established either the Uniform Gifts to Minor Act (UGMA) or the Uniform Trusts to Minors Act (UTMA) can be used for this purpose. The IRA owner names the custodian of the account on the IRA beneficiary form. Please click HERE to read more.

Federal Open Season and Year End Decisions

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As the 2022 year ends, Federal Employees and Retirees need to consider many decisions about their benefits, taxes and their Thrift Savings Plan. Open Season is the time to review your health insurance pertaining to the benefits that may be needed in the coming year such a new baby or required surgery. It may be necessary to change your policy in order to save money especially if your premium is going up next year. Here are seven thoughts that should be considered during open season and before 2022 ends.

1. FEHB decisions include, health, dental and vision plans. Saving on premiums with a lesser expensive plan or reducing from a family plan to self plus one plan.

2. TSP contributions for the following year. The maximum allowed by the IRS has increased for 2023 to 22,500 and for those over 50 years of age to 30,000. Click HERE to read more.