Matching Student Loan Contributions

Do you have student loan debt that is keeping you from contributing to your employer’s retirement plan? Beginning in 2024, employers may match contributions when employee’s make student loan payments. If the employer has a student loan matching plan, the employer can make the company match contribution to the employee’s plan. You as the employee can then continue paying down your debt and have your employer fund your retirement plan. Further clarification on this matter is expected to be released before this goes into effect in 2024. 

Roth 401(k) RMD?

Roth IRAs do not have RMDs because taxes are paid when you make your contribution. However, a Roth 401(k) does have RMD requirements. To avoid the RMD, you roll your Roth 401(k) into your Roth IRA. You only need to do this if you reach(ed) RMD starting age in 2023 or earlier. In 2024, Roth 401(k)s will no longer be subject to RMDs.

Do you have money stuck in a 529 plan?

Beginning in 2024, beneficiaries of 529 education-savings accounts may transfer funds into their Roth IRA without taxes or penalties. In order to be eligible, the 529 must have been open for a minimum of 15 years and the owner of the Roth IRA must be the beneficiary of the 529 plan. The rollover limit is $35,000 lifetime and limited to the annual Roth contribution limits which are currently $6,500 or $7,500 per year. If you have a large balance, this will take a few years to execute.

Qualified Charitable Distributions

Are you over 70.5 and make charitable donations each year?  You may be able to use a qualified charitable distribution (QCD) which allows you to donate up to $100,000 per year directly from your IRA. The amount donated will count against your required minimum distribution requirements and reduces your taxable income on IRA distributions. If you typically take the Standard Deduction, the QCD allows you to get a deduction for your donations. Starting in 2024, qualified charitable distributions limit will be adjusted for inflation.

Required Minimum Distributions Now Required at Age 73

SECURE 2.0 Act of 2022 increased the minimum age for individuals to begin taking their Required Minimum Distributions (RMD) from their qualified pre-tax accounts (401(k)s, IRAs, 403(b)s, 457(b)s) from 72 to 73.  For an individual who turns 72 after December 31, 2022 and 73 before January 1, 2033, their first RMD must be taken by April 1 of the calendar year following the year they turn 73.  This means for individuals born in 1951, the first RMD does not need to be taken until April 1, 2025.  If you were born in 1951 and mistakenly took an RMD in 2023 already (not required to), you have until September 30, 2023 to “rollover” the distribution amount back into the account and avoid any tax liability.  A typical rollover is required to be completed within 60 days but the IRS has given relief for those who mistakenly took an RMD in 2023 until September 30, 2023 regardless of when the RMD was taken.