Welcome to 2024, a year of new beginnings. As we enter 2024, it’s important to keep in mind 2023 tax updates, especially changes in Required Minimum Distributions (RMDs), the Corporate Transparency Act (CTA), and the implications of these changes on estate planning. This is an opportune time to integrate estate planning into your New Year’s resolutions, ensuring both peace of mind and financial security.
Understanding the Changes in RMDs:
The SECURE 2.0 Act, effective from 2023, has increased the age for RMDs from retirement accounts to 73, offering more flexibility in retirement planning. This change is pivotal for those planning their estate as it affects the timing and strategy of retirement withdrawals. Additionally, RMD requirements from designated Roth accounts in retirement plans are set to end from 2024, marking a significant shift in retirement planning strategies.
Tax Law Changes and Their Impact on Estate Planning:
The Tax Cuts and Jobs Act of 2017 (TCJA) significantly raised each person’s lifetime estate and gift exclusion. Adjusted for inflation, this amount stands at $12,920,000 in 2023. However, post-2025, we expect this to reduce to about $6,000,000. This potential decrease underlines the importance of proactive estate planning, particularly for those with larger estates.
The Corporate Transparency Act (CTA):
The CTA necessitates certain business entities to disclose detailed information about their beneficial owners. This regulation primarily impacts small businesses and is crucial for individuals involved in these enterprises to consider within their estate planning.
With the evolving tax landscape, 2024 is the perfect year to prioritize estate planning. From revising wills to aligning retirement accounts with estate strategies, each step is integral to securing your legacy.
Actionable Steps for 2024:
- Review Your Estate Plan: Align your plan with the latest tax laws and regulations.
- Understand the CTA: Business owners must familiarize themselves with CTA requirements to ensure compliance.
- Consider Making Gifts: With the potential exemption reduction post-2025, consider taking advantage of the $17,000 annual gifting exclusion.
- Align Retirement and Estate Planning: Integrate the new RMD age requirements into your estate strategy.
- Stay Informed on Roth IRA Changes: Prepare for the cessation of RMDs from designated Roth accounts starting 2024.
- Consult Professionals: Navigate the complexities of estate and retirement planning with expert advice.
As we step into 2024, we face both new challenges and opportunities in estate and retirement planning. By staying informed and proactive, we can confidently navigate these changes, ensuring our financial future and legacy are secure. Let this year be marked by informed decisions, strategic planning, and a commitment to peace of mind and financial security. Take care.
