It’s tax season again. And that means you may be fielding questions from your RIA firm’s clients about what’s new for 2023. One thing on our radar: the SECURE 2.0 Act that was signed into law at the end of 2022.

Building on the SECURE Act of 2019, this legislation ushers in widespread changes to retirement plans and savings. Although many of the changes won’t take effect until 2024 at the earliest, some of its provisions will impact plans in 2023.

It’s worth noting that the SECURE 2.0 Act will be mostly beneficial to individuals in the higher income brackets—particularly those age 50 and older who have kids at or near college age. To help you know how to best advise your clients in navigating it, here are a few things they should know.

Changes to RMDs

One of the most significant changes brought about by the SECURE 2.0 Act is the increase to the age at which RMDs go into effect: to age 73 in 2023 and age 75 in 2033.

What this means for your clients: those who turned 72 in 2022 or earlier would need to continue taking RMDs as scheduled. Clients who are turning 72 in 2023 and have already scheduled their withdrawals may want to consider updating their withdrawal plan.

The SECURE 2.0 Act also reduces the penalties for failing to take an RMD from 50% of the RMD amount to 25%. For RMDs from IRAs, this amount falls to 10%, if corrected in a timely manner.

Starting in 2024, RMDs will no longer be required from Roth accounts in employer retirement plans.

Higher catch-up contributions

Starting in 2024, the IRA catch-up contribution limit of $1,000 for individuals age 50 and over will be indexed to inflation, which means it could increase every year.

In 2025, individuals age 60 through 63 will be able to increase their catch-up contributions for their workplace 401(k), 403(b), governmental plans, and IRAs. The annual catch-up contribution limit will be up to $10,000 annually, and it will also be indexed to inflation.

What’s more, if an individual earns more than $145,000 in the prior calendar year (2024), all catch-up contributions at age 50 or older will need to be made to a Roth account in after-tax dollars. This provision will not apply to individuals earning $145,000 or less.

Matching for Roth accounts

Employers will now be able to provide employees with the option of receiving vested matching contributions to Roth accounts. Unlike Roth IRAs, RMDs from an employer-sponsored plan are required for Roth accounts until tax year 2024.

Tax-free rollovers 529 accounts to Roth IRAs

Last but not least, 529 plan assets can now be rolled over to a Roth IRA for the beneficiary—as long as the 529 has been open for more than 15 years.

The rollover, however, is subject to annual Roth contribution limits and an aggregate lifetime limit of $35,000. (The rollover is treated as a contribution towards the annual Roth IRA contribution limit.) Rollovers cannot exceed the aggregate before the 5-year period ending on the date of distribution.

Set your clients on the right path.

Legislation such as the SECURE 2.0 Act can significantly impact your clients’ financial and tax planning. It’s important to make sure they know what steps to take and when. If you’re concerned about making sure your clients get the right guidance, we can help.

Our Elevate RIA Tax Solutions (ERTS) service helps you easily add tax planning services to your practice by giving you access to a team of seasoned CPAs. In addition to keeping your clients aware of changing tax laws that could impact them, we deliver tax preparation and planning services to your clients—all under your firm, brand, and voice. The result: you deepen your client relationships while adding value to your family services offering.

To learn more about how we can help, contact us today.

Rising labor costs and inflation have impacted nearly every industry in the last couple of years—the CPA industry is no exception. As a result, many CPA firms have had to raise fees, release clients, and even limit the amount of work they accept.

What we’re hearing in the RIA realm: Good tax help is hard to find.

In addition to creating challenges for your firm, this situation creates a special conundrum for you when advising clients. How do you, as their trusted investment professional, help your clients manage their tax preparation and review needs?

Here’s how to keep your clients above the fray.

Explain the situation.

Given that most people aren’t avid readers of Accounting Today, it’s likely these CPA price hikes will come as a surprise to your clients. To prevent an unpleasant sticker shock, make sure your clients are aware that fees for tax services are going up, and they will most likely stay that way.

How much will they go up? According to a survey of 232 CPA firms conducted by Rosenberg Associates , a consultancy that works with CPAs, respondents most common planned fee increases is in the 10%–13% range for 2023.

Advise your clients to be good clients.

This is not the year to send your tax information to your CPA on April 12. Due to staffing shortages and a need to retain talented CPAs, accounting firms are less hesitant than in the past to jettison problem clients. To keep your clients off their CPA’s naughty list, encourage them to be responsive, organized, and pleasant to deal with.

Consider a non-local solution.

If your clients are having a hard time finding a local CPA, recommend that they expand their search to include additional localities. Like many professional services providers, CPAs have become accustomed to providing services remotely. In the end, your client may find the convenience of electronic communication to be a benefit.

Save the day with a team of in-house CPAs.

What if your clients could go to your firm for tax services? Considering the state of the CPA industry, this solution could take worry off your clients’s plates: they’d get the tax services they need from their trusted RIA.

At Elevate, we make this possible through our Elevate RIA Tax Solutions (ERTS) service offering. ERTS helps you easily add tax preparation and review services to your practice by giving you access to a team of seasoned CPAs. We deliver tax service to your clients under your firm, brand, and voice, allowing you to add value to your family services offering.

Intrigued? Contact us today to learn more about how we can help you keep your clients out of this ever-evolving fray.