New Statute of Limitations

A statute of limitations has been implemented regarding time frames for the IRS to issue penalties. The statute of limitations is three years for missed RMDs and six years for the excess IRA contributions excise tax. There was no limit previously.

Reduced Penalties for Missed RMDs

Do you have any undistributed required minimum distributions (RMDs) from prior tax years?  Under previous rules, failure to distribute your full RMD could result in a 50% excise tax. Secure 2.0 Act reduces penalties for those failing to withdraw their required minimum distribution to 25%.  The penalty can be further reduced to 10% by correcting your RMD within two years. You may also request to waive your penalties by filling out Form 5329 for the IRS.

New RMD Starting Ages

Starting January 1, 2023, the required minimum distribution (RMD) starting age will increase from 72 to 73. This means that if you turn 72 in 2023, you do not have to take your RMD until 2024.  This allows you to benefit from another year of tax-deferred growth in your IRAs. Individuals who met previous RMD age standards must continue to take their RMDs. The RMD age will increase again to 75 in 2033.

Incorporating Cost Segregation into Your Real Estate Investment Strategy

Cost segregation is a tax-deferred strategy that allows real estate investors to accelerate depreciation and achieve immediate tax savings through the classification of appliances, carpets, and all other interior and exterior components on the property. Cost segregation could be advantageous after acquiring a new property, as an alternative to a 1031 exchange, or in cases of partial asset dispositions.