Over the past 5 years the landscape of self-directed IRAs (SDIRAs) and self-directed Solo 401(k) accounts has changed.  As a result, we see several key developments, especially with the passage of the SECURE Act 2.0 in 2022. Here are the significant updates:

Required Minimum Distributions

1. Required Minimum Distribution (RMD) Age Increased: Effective in 2023, the age for RMDs from tax-deferred retirement accounts like Traditional, SEP, and SIMPLE IRAs increased from 72 to 73 years. In 2033, this will further increase to 75 years.

2. RMD Penalty Reduction: The penalty for failing to take an RMD has been reduced from a 50% excise tax to a 25% excise tax of the required amount. If corrected timely, this further reduces to 10%.

3. Changes in Prohibited Transactions: The SECURE 2.0 Act specifies that if an IRA owner engages in a prohibited transaction, only the IRA involved will be disqualified, not all IRAs of the individual.

Bonus Additions to IRA Savings

4. Higher Catch-Up Contributions (Effective 2025): There will be an increase in catch-up contributions for individuals aged 60-63, enhancing the capacity for later-stage retirement savings.

5. Saver’s Match (Effective 2027): A new initiative, the Saver’s Match, will be introduced, which is particularly relevant for SIMPLE IRA account owners.

6. Increased Flexibility in Contributions: SEP and SIMPLE IRAs, previously limited to pre-tax contributions, can now hold both pre-tax and post-tax funds. Additionally, catch-up contributions will be indexed with inflation starting in 2024.

Employer Programs

7. Automatic Enrollment in 401(k)s: Starting in 2025, new 401(k) plans must automatically enroll participants to contribute between 3% and 10%, with yearly increases up to 10%-15%, though participants can opt-out.

8. Employer Matching for Student Loan Payments: Employers can now match student loan payments into 401(k)s, broadening the scope of employer contributions.

9. Saver’s Credit Transformations: The Saver’s Credit will evolve into a matching system, depositing funds directly into individuals’ retirement accounts, effective after December 31, 2026.

Lost and Found

10. Retirement Savings Lost and Found: The Department of Labor will create a system to help individuals locate their pension or 401(k) benefits from past employers.

In the Realm of SDIRA Investments, Particularly in Cryptocurrencies

1. Crypto IRAs: SDIRAs allow investing in a wide range of assets, including cryptocurrencies like Bitcoin, Ethereum, and others. These IRAs are increasingly popular for their potential to diversify portfolios and hedge against inflation.

2. Types of Crypto SDIRAs: Investors can choose between Custodian Controlled SDIRAs, offering more streamlined processes and IRS compliance, and Checkbook Control SDIRAs, providing greater autonomy but requiring more involvement and responsibility for compliance.

These updates reflect the evolving landscape of retirement planning and the incorporation of modern asset classes like cryptocurrencies into traditional investment strategies.  For more information on self-directing your retirement, reach out to us at info@uDirectIRA.com.   Because uDirect IRA Services is not a fiduciary, we do not provide investment advice.  We do provide a free 20-minute consultation to discuss your questions.