📅 2026 Update: Recent Changes in Retirement and Consumer Finance

Since the original article on depreciation was written, there have been several significant updates in the realm of retirement savings and consumer finance. These updates are particularly relevant for individuals managing their retirement accounts and understanding penalties related to withdrawals. The earlier article continues further down the page, providing foundational knowledge on these topics.

📈 SECURE 2.0 Act Changes

The SECURE 2.0 Act brought important changes to retirement savings. One key change is the increase in the age for Required Minimum Distributions (RMDs). For those born between 1951 and 1959, the RMD age is now 73, while individuals born in 1960 or later will start at 75 in 2033.

This shift allows more time for retirement savings to grow.

  • 🔍 RMD Penalty Reduction: The penalty for missing an RMD has decreased from 50% to 25% of the missed amount. If corrected within two years, this penalty drops further to just 10% for IRAs.

🏦 Roth 401(k) Changes

Starting in 2024, RMDs are no longer required from Roth accounts in employer retirement plans, including 401(k)s and 403(b)s. This change allows for more flexibility in managing funds and can benefit those looking to maximize their retirement savings.

💰 Catch-Up Contributions

Beginning on January 1, 2025, those aged 60 to 63 can make catch-up contributions of up to $11,250 to eligible retirement plans. This is an increase from the previous limit of $8,000, providing an extra boost for individuals nearing retirement.

🎓 529-to-Roth IRA Rollovers

Starting in 2024, individuals can roll over up to $35,000 from 529 college savings plans to a Roth IRA. This feature adds flexibility for families looking to manage their education funds and retirement savings more effectively.

📌 Key Points Summary

  • 🔹 RMD age raised to 73 for those born 1951-1959, 75 for those born in 1960 or later.
  • 🔹 RMD penalty reduced to 25%, or 10% if corrected timely.
  • 🔹 No RMDs required from Roth accounts in employer plans starting in 2024.
  • 🔹 Catch-up contributions increase to $11,250 for ages 60-63 in 2025.
  • 🔹 Rollovers from 529 plans to Roth IRAs allowed starting in 2024.

💡 Tips for Managing Retirement Accounts

Reviewing your retirement account details with an attorney is essential to ensure you understand your options.

🔍 Understand RMD Rules

Make sure you know when to start taking RMDs based on your birth year. Missing these deadlines can lead to costly penalties.

📅 Plan for Catch-Up Contributions

If you're aged 60 to 63, plan for increased catch-up contributions starting in 2025. This can help you boost your retirement savings as you approach retirement.

💡 Utilize Roth IRA Benefits

Consider the advantages of having a Roth IRA. With the new rules, you won't have to take RMDs from Roth accounts, allowing your money to grow tax-free for longer.

🎓 Explore 529-to-Roth Rollovers

If you have leftover funds in a 529 plan, check if rolling over to a Roth IRA is a good fit for your financial strategy starting in 2024.

📞 Take Advantage of Employer Programs

If your employer offers matching contributions for student loan payments, take advantage of this benefit. It can help you save for retirement while paying off student debt.

❓ Frequently Asked Questions

🤔 What are Required Minimum Distributions (RMDs)?

RMDs are mandatory amounts that must be withdrawn from retirement accounts once you reach a certain age, currently starting at 73 or 75 depending on your birth year.

💼 How can I avoid penalties related to RMDs?

To avoid penalties, ensure you withdraw the required amount by the deadline. If you miss it, correcting the mistake promptly can reduce penalties significantly.

📈 How do catch-up contributions work?

Catch-up contributions allow individuals aged 60 to 63 to contribute more to their retirement accounts, starting at $11,250 in 2025, providing an opportunity to boost savings.

💡 Can I use 529 funds for retirement?

Beginning in 2024, you can roll over up to $35,000 from a 529 college savings plan to a Roth IRA, allowing for greater flexibility in managing education and retirement funds.

🏦 Are there fees for retirement accounts?

Yes, fees for retirement accounts can vary widely. It's essential to review the fees associated with your 401(k) or IRA provider to ensure they are manageable.

🎓 What resources are available for retirement planning?

Free resources like the CFPB, DOL, and NEFE offer guidance and educational materials on retirement planning and consumer finance.

⚖️ Recent Court Cases Related to Retirement and Finance

Recent court rulings have impacted regulations surrounding retirement accounts and consumer finance. These rulings can affect how individuals manage their retirement savings and understand their rights.

For more recent rulings, feel free to browse more rulings on the news page.

End of October 2026 Update






What is Depreciation?

As a financial term, “depreciation” refers to the following separate, but related concepts: 

o Depreciation may refer to the decline in the value of assets

Depreciation

o Depreciation may also refer to the allocation of the cost of assets to periods where the assets are used

• The first definition of depreciation affects the values of goods, assets, businesses and entities, while the latter predominantly affects net income. 

Different entities will define depreciation in an assortment of ways; however, in a general sense, the term refers to the diminishing value attached to a good, asset or business organization as a result of the underlying object’s wear and tear, obsolescence or deterioration. For example, if a consumer purchases a television, with the most updated technology, that particular television will invariably undergo depreciation within the next five years, as newer and better televisions hit the market. 

Depreciation in Accounting:

When determining the profits (net income) from a specific activity, the receipts from the activity must be reduced by the appropriate costs. One such cost is the expense of the underlying assets used, but not necessarily consumed, in the activity. The cost of an asset is the difference between the amount paid for the asset and the amount expected to be received upon its forfeiture, sale or disposition. 

Depreciation refers to any method of allocating such net costs to those periods expected to benefit from the use of the asset. As a result, depreciation is a method of allocation and not valuation in accounting. 

Any business using tangible assets may incur costs related to the aforementioned asset groups. When the assets produce a benefit in future periods, the costs must be deferred rather than treated as current expenditures. The business will then record depreciation expenses as an allocation of such costs for financial reporting purposes. When evaluating deprecation as an accounting concept the following criteria must be analyzed: the cost of the asset, the estimated useful life of the asset, a method of apportioning the cost over such life and the expected savage value or residual value of the asset.

How does the IRS define Depreciation?

The Internal Revenue Service defines depreciation as an income tax deduction that allows a taxpayer to recover the cost of certain property. Depreciation, in regards to taxation, refers to the annual allowance for the wear and tear, deterioration or obsolescence of the property.

The majority of tangible property (with the exception of land), such as buildings, vehicles, machinery, furniture and equipment are depreciable. In order for a taxpayer to be allowed a depreciation deduction for a property, the investment must meet all the following requirements:

o The taxpayer must own the property

o The taxpayer must use the property in business or in an income-producing activity.

o The property must possess a determinable useful life of more than one year.