401(k) Specialist Issue 1 - 2023 - 10

401(k) FIDUCIARY FILE
RMD Age Increases
to 73 in 2023 Under
SECURE 2.0
ONE OF THE MOST immediate impacts of the SECURE 2.0 Act of
2022 passed by Congress is raising the age for RMDs from retirement
accounts, including 401(k)s and IRAs, from 72 to 73 beginning Jan.
1, 2023.
Under the new legislation, the RMD age will remain at 73 for a
decade before jumping up to age 75 in 2033.That's a big jump from
just a few years ago, when the RMD age was 70½ before the original
SECURE Act of 2019 bumped it to 72 starting in 2020.
In 2022, seniors must start taking RMDs from 401(k) accounts,
traditional IRAs, and similar retirement savings accounts (other than
Roth IRAs) in the year they turn 72 (although they have until April 1
of the following year to take their first RMD).
The policy behind the RMD age rule is to ensure that individuals
spend their retirement savings during their lifetime and not use
their retirement plans for estate planning purposes to transfer
wealth to beneficiaries.
Section 325 of SECURE 2.0 also removes pre-death RMDs from
Roth accounts, like Roth 401(k)s and Roth 403(b) accounts. Moving
forward, those accounts won't be subject to the RMD rules before
the account holder dies.
Section 201 of SECURE 2.0 boosts the use of QLACs in a way that
can help reduce RMDs by removing the 25% limit and bumping the
dollar amount up to $200,000 (adjusted for inflation each year).
New Research Turns Traditional Retirement
Income Planning on its Head
RISA AND THE Retirement Income Institute of the Alliance for Lifetime
Income released a three-part research series that changes the conversation
about retirement income strategies, turning traditional retirement
income planning on its head by first focusing on the consumer and their
preferences.
The series focuses on the critical building blocks of a consumer-first
retirement income approach, including quantifying retirement income
beliefs and preferences to determine a retirement income style, understanding
how retirement income preferences inform retirement income,
10
ISSUE 1 2023 | 401kSpecialist.com
and identifying the imitations of risk tolerance questionnaires when it
comes to addressing retirement income concerns.
The development of the RISA matrix represents the practical application
of Pfau and Murguia's research, bringing together salient psychological
concepts and retirement income planning into a systematized process
for individuals and advisors to find the protected income strategies
that best meet unique preferences.
Unlike in the accumulation phase of their financial journey, individuals
in or approaching retirement face different risks that aren't accounted
for using traditional risk tolerance questionnaires. With the RISA, advisors
can capture how their clients want to account for these risks and ensure
those preferences are considered within their retirement income plan.
" The RISA is changing the retirement income conversation for advisors
and their clients, " said retirement income authority Alex Murguia, who
authored the research along with Wade Pfau. " For the first time, advisors
can accurately identify an individual's retirement income preferences and
easily point them to a solution that accommodates those preferences,
empowering the consumer with the knowledge, confidence and peace of
mind that this is the right strategy for their retirement goals. "
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401(k) Specialist Issue 1 - 2023

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