Retirement rules change.
Retirement rules change. Sometimes frequently. Sometimes drastically.
Your plan shouldn’t assume today’s tax rules will stay the same!
In this video we cover how required minimum distributions have moved from age 70½ to 72 to 73 (and will go to 75), the drop in the RMD penalty from 50% to 25% (and as low as 10% if corrected in time), the end of the lifetime stretch IRA for most non-spouse heirs, earlier Roth conversion limits, the taxation of Social Security, and shifting SALT deduction caps.
Don’t build a retirement plan that only works if today’s rules remain in place.
Spread your savings across pre-tax, Roth, and taxable accounts, and review the plan when the tax laws (and retirement rules change)….. not just when the market moves.
When the rules change – and they will – we are here to help you adjust.
Retirement rules change – Links
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Additional Links for “Retirement Rules Change”:
**Required Minimum Distributions (RMD ages, SECURE / SECURE 2.0)**
– IRS — Retirement Topics – Required Minimum Distributions (RMDs)
https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-required-minimum-distributions-rmds
– IRS Publication 590-B (Distributions from Individual Retirement Arrangements)
https://www.irs.gov/publications/p590b
**SECURE Act of 2019 and SECURE 2.0 Act of 2022**
– Congress.gov — SECURE Act (2019)
https://www.congress.gov/bill/116th-congress/house-bill/1994
– Congress.gov — Consolidated Appropriations Act, 2023 (contains SECURE 2.0)
https://www.congress.gov/bill/117th-congress/house-bill/2617
**RMD penalty reduction**
– Covered in the IRS RMD page above (penalty reduced from 50% to 25%, and to 10% if corrected in time).
**Stretch IRA / 10-year rule**
– Also covered in IRS Publication 590-B and the IRS RMD page.
**Social Security taxation**
– Social Security Administration — Income Taxes And Your Social Security Benefits
https://www.ssa.gov/benefits/retirement/planner/taxes.html
– IRS Publication 915 (Social Security and Equivalent Railroad Retirement Benefits)
https://www.irs.gov/publications/p915
**SALT deduction cap**
– IRS — Topic No. 503, Deductible Taxes
https://www.irs.gov/taxtopics/tc503
Retirement rules change – Transcript
Your plan for retirement assumes the rules won’t change.
History says they will!
Last week, we went back to 1986 when one law rewrote capital gains, pretty much wiped out tax shelters, and it even changed what goes on your tax return.
That wasn’t a one-time thing.
Your retirement plan is built on today’s tax rules.
But Washington rewrites those rules every few years.
By the way, if you’re new here, my name is Tom Mullooly.
I own a financial planning and investment advisory firm here in Wall Township, New Jersey.
And I work alongside my three sons, who are all certified financial planners, just like me.
For decades, required minimum distributions started at (age) 70 and a half.
The SECURE Act of 2019 raised that to age 72.
And then SECURE 2.0 raised it to 73 starting in 2023, and it goes to 75 in 2033.
Anyone who built a plan around age 70 and a half has already had to redo their plan twice.
The penalty changed, too.
Before 2023, if you missed a required minimum distribution, RMD, the penalty was 50% of the amount that you didn’t take.
SECURE 2.0 cut that to 25 percent.
And if you fix the mistake in time, it drops to just 10%.
Most headlines only said 50% down to 25.
They missed that last part.
Then there’s the Stretch IRA. Remember that?
Children who inherited an IRA used to be able to spread withdrawals over their whole lifetime.
But since 2020, most heirs – who are not a spouse – have to empty their inherited account within 10 years.
The Roth rules changed as well.
Until 2010, you couldn’t convert a Roth if your income was over $100,000.
And the “undo button,” called a recharacterization, or, “recharacterizing a conversion,” …..that all went away almost 10 years ago, in 2018.
Social Security benefits weren’t taxed at all until 1984.
And since 1994, up to 85% of your benefits can be taxed.
And those income thresholds have never been adjusted for inflation.
Regarding your state and local taxes: Here in New Jersey, the cap on deducting your state and local taxes was $10,000 from 2018 through 2024.
That rose to $40,000 for 2025.
And $40,400 for 2026 with a phase-out for higher earners.
Under current law, it drops all the way back to $10,000 in 2030.
So what do you do about this?
Well, don’t build a plan that only works if today’s rules stay put.
You have to spread your savings across pre-tax, Roth, and taxable accounts.
And you have to review your plan when the law changes, not just when the market moves.
The only rule that hasn’t changed is that the rules change.
We’re right here in Wall Township, working with families up and down the Jersey Shore.
When the rules change….. and they will….. we’d love to help you adjust as well.
(and thanks for watching “Retirement Rules Change…”)
