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New Rules and Changes to Retirement Plans for 2023

New Rules and Changes to Retirement Plans for 2023


As we move into the new year, there are some big changes in retirement planning and how matches and distributions will be set up moving forward. President Biden had recently signed a $1.7 trillion spending bill that will include key provisions that will help make saving for retirement easier. The bill could possibly transform 401k plans for millions of Americans as the bill contains adjustments to distributions and withdrawals.  

This section of the spending bill was added due to a large number of Americans who are working past the age of 75 and that number is expected to continue growing where, according to the Bureau of Labor Statistics, it is expected the 75 and older working population will grow by 96.5% by 2023. Many Americans are being forced to work past their retirement years as many are not able to fully support themselves on their Social Security and retirement savings,

According to PricewaterhouseCoopers, a third of Americans do not have access to a private retirement savings plan, such as a 401k. The new bill, known as Secure 2.0, will mostly help those who already have a private retirement account; however, there are some additions to the bill that will aid certain employees who do not have access to a private retirement plan through their place of work. 

These are some of the changes that will be featured in the new bill.


  • Raising the RMD Age to 73 (With the Age Eventually Increasing to 75)-retirees who have a retirement savings whether it is a 401(k) or IRA is required to take their initial minimum distributions at age 72. However, this new bill will push that requirement back another year so they will not have to begin taking out those distributions until 73 with it eventually being pushed back to 75. These changes will begin this year, with those who turn 73 in 2023 will need to take their required minimum distribution no later than April 1, 2023; the age for RMDs will raise to 75 in 2033.

  • Removing RMD’s from Roth 401(k)s-currently, those who have a Roth 401(k) are required to take minimum distributions starting at age 72, however, this bill plans to eliminate RMDs since, like a Roth IRA, that doesn’t require a minimum distribution for the lifetime of the retirement plan. This change will be expected to take place in 2024.

  • Lowering RMD Tax Penalties-one of the biggest hits to retired seniors is tax penalties, especially since many of the withdrawal moves are complicated and easy to make mistakes with the IRS enacting their penalties. This new law will reduce any withdrawal penalty from 50% on the RMD amount that was not withdrawn down to 25%. If the taxpayer is able to fix the mistake in a timely manner then they can further reduce the penalty to 10%.

The plan for this new act is to better help retirees to have more a little more freedom and choice with their retirement plans and less penalties from the government when a mistake is made. This will be a great benefit for many retirees who can now have an extra year to delay taking out distributions from their retirement for another year without being penalized for it, further allowing their investment to grow an extra year and further build up their retirement egg. 

If you have any new questions regarding  the changes in Secure 2.0, please book a meeting with us below:

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