Effective: February 7, 2022
Your Stuff & Your Permissions
When you use our Services, you provide us with things like your files, content, messages, contacts, and so on ("Your Stuff"). Your Stuff is yours. These Terms don’t give us any rights to Your Stuff except for the limited rights that enable us to offer the Services.
We need your permission to do things like hosting Your Stuff, backing it up, and sharing it when you ask us to. Our Services also provide you with features like eSign, file sharing, email newsletters, appointment setting and more. These and other features may require our systems to access, store, and scan Your Stuff. You give us permission to do those things, and this permission extends to our affiliates and trusted third parties we work with.
Sharing Your Stuff
Our Services let you share Your Stuff with others, so please think carefully about what you share.
You’re responsible for your conduct. Your Stuff and you must comply with applicable laws. Content in the Services may be protected by others’ intellectual property rights. Please don’t copy, upload, download, or share content unless you have the right to do so. We may review your conduct and content for compliance with these Terms. With that said, we have no obligation to do so. We aren’t responsible for the content people post and share via the Services.
Help us keep you informed and Your Stuff protected. Safeguard your password to the Services, and keep your account information current. Don’t share your account credentials or give others access to your account.
You may use our Services only as permitted by applicable law, including export control laws and regulations. Finally, to use our Services, you must be at least 13, or in some cases, even older. If you live in France, Germany, or the Netherlands, you must be at least 16. Please check your local law for the age of digital consent. If you don’t meet these age requirements, you may not use the Services.
Some of our Services allow you to download client software (“Software”) which may update automatically. So long as you comply with these Terms, we give you a limited, nonexclusive, nontransferable, revocable license to use the Software, solely to access the Services. To the extent any component of the Software may be offered under an open source license, we’ll make that license available to you and the provisions of that license may expressly override some of these Terms. Unless the following restrictions are prohibited by law, you agree not to reverse engineer or decompile the Services, attempt to do so, or assist anyone in doing so.
We sometimes release products and features that we are still testing and evaluating. Those Services have been marked beta, preview, early access, or evaluation (or with words or phrases with similar meanings) and may not be as reliable as other non-beta services, so please keep that in mind.
The Services are protected by copyright, trademark, and other US and foreign laws. These Terms don’t grant you any right, title, or interest in the Services, others’ content in the Services, CountingWorks and our trademarks, logos and other brand features. We welcome feedback, but note that we may use comments or suggestions without any obligation to you.
We respect the intellectual property of others and ask that you do too. We respond to notices of alleged copyright infringement if they comply with the law, and such notices should be reported to legal@CountingWorks.com. We reserve the right to delete or disable content alleged to be infringing and terminate accounts of repeat infringers. Our designated agent for notice of alleged copyright infringement on the Services is:
You’re free to stop using our Services at any time. We reserve the right to suspend or terminate your access to the Services with notice to you if:
We won’t provide notice before termination where:
Discontinuation of Services
We may decide to discontinue the Services in response to unforeseen circumstances beyond CountingWorks control or to comply with a legal requirement. If we do so, we’ll give you reasonable prior notice so that you can export Your Stuff from our systems.
Services “AS IS”
We strive to provide great Services, but there are certain things that we can't guarantee. TO THE FULLEST EXTENT PERMITTED BY LAW, CountingWorks AND ITS AFFILIATES, SUPPLIERS AND DISTRIBUTORS MAKE NO WARRANTIES, EITHER EXPRESS OR IMPLIED, ABOUT THE SERVICES. THE SERVICES ARE PROVIDED "AS IS." WE ALSO DISCLAIM ANY WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND NON-INFRINGEMENT. Some places don’t allow the disclaimers in this paragraph, so they may not apply to you.
Limitation of Liability
WE DON’T EXCLUDE OR LIMIT OUR LIABILITY TO YOU WHERE IT WOULD BE ILLEGAL TO DO SO—THIS INCLUDES ANY LIABILITY FOR CountingWorks OR ITS AFFILIATES’ FRAUD OR FRAUDULENT MISREPRESENTATION IN PROVIDING THE SERVICES. IN COUNTRIES WHERE THE FOLLOWING TYPES OF EXCLUSIONS AREN’T ALLOWED, WE'RE RESPONSIBLE TO YOU ONLY FOR LOSSES AND DAMAGES THAT ARE A REASONABLY FORESEEABLE RESULT OF OUR FAILURE TO USE REASONABLE CARE AND SKILL OR OUR BREACH OF OUR CONTRACT WITH YOU. THIS PARAGRAPH DOESN’T AFFECT CONSUMER RIGHTS THAT CAN'T BE WAIVED OR LIMITED BY ANY CONTRACT OR AGREEMENT.
IN COUNTRIES WHERE EXCLUSIONS OR LIMITATIONS OF LIABILITY ARE ALLOWED, CountingWorks, ITS AFFILIATES, SUPPLIERS OR DISTRIBUTORS WON’T BE LIABLE FOR:
THESE EXCLUSIONS OR LIMITATIONS WILL APPLY REGARDLESS OF WHETHER OR NOT CountingWorks OR ANY OF ITS AFFILIATES HAS BEEN WARNED OF THE POSSIBILITY OF SUCH DAMAGES.
IF YOU USE THE SERVICES FOR ANY COMMERCIAL, BUSINESS, OR RE-SALE PURPOSE, CountingWorks, ITS AFFILIATES, SUPPLIERS OR DISTRIBUTORS WILL HAVE NO LIABILITY TO YOU FOR ANY LOSS OF PROFIT, LOSS OF BUSINESS, BUSINESS INTERRUPTION, OR LOSS OF BUSINESS OPPORTUNITY. CountingWorks AND ITS AFFILIATES AREN’T RESPONSIBLE FOR THE CONDUCT, WHETHER ONLINE OR OFFLINE, OF ANY USER OF THE SERVICES.
Let’s Try To Sort Things Out First. We want to address your concerns without needing a formal legal case. Before filing a claim against CountingWorks or our affiliates, you agree to try to resolve the dispute informally by contacting legal@CountingWorks.com. We’ll try to resolve the dispute informally by contacting you via email.
Judicial forum for disputes. You and CountingWorks agree that any judicial proceeding to resolve claims relating to these Terms or the Services will be brought in the federal or state courts of Orange County, California, subject to the mandatory arbitration provisions below. Both you and CountingWorks consent to venue and personal jurisdiction in such courts. If you reside in a country (for example, European Union member states) with laws that give consumers the right to bring disputes in their local courts, this paragraph doesn’t affect those requirements.
IF YOU’RE A U.S. RESIDENT, YOU ALSO AGREE TO THE FOLLOWING MANDATORY ARBITRATION PROVISIONS:
These Terms will be governed by California law except for its conflicts of laws principles. However, some countries (including those in the European Union) have laws that require agreements to be governed by the local laws of the consumer's country. This paragraph doesn’t override those laws.
These Terms constitute the entire agreement between you and CountingWorks with respect to the subject matter of these Terms, and supersede and replace any other prior or contemporaneous agreements, or terms and conditions applicable to the subject matter of these Terms. These Terms create no third party beneficiary rights.
Waiver, Severability & Assignment
CountingWorks failure to enforce a provision is not a waiver of its right to do so later. If a provision is found unenforceable, the remaining provisions of the Terms will remain in full effect and an enforceable term will be substituted reflecting our intent as closely as possible. You may not assign any of your rights under these Terms, and any such attempt will be void. CountingWorks may assign its rights to any of its affiliates or subsidiaries, or to any successor in interest of any business associated with the Services.
We may revise these Terms from time to time to better reflect:
If an update affects your use of the Services or your legal rights as a user of our Services, we’ll notify you prior to the update's effective date by sending an email to the email address associated with your account or via an in-product notification. These updated terms will be effective no less than 30 days from when we notify you.
If you don’t agree to the updates we make, please cancel your account before they become effective. By continuing to use or access the Services after the updates come into effect, you agree to be bound by the revised Terms.
Effective: February 7, 2022
Thanks for visiting our website. Our mission is to create a web based experience that makes it easier for us to work together. Here we describe how we collect, use, and handle your personal information when you use our websites, software, and services (“Services”).
What & Why
We collect and use the following information to provide, improve, and protect our Services:
Account information. We collect, and associate with your account, the information you provide to us when you do things such as sign up for your account, opt-in to our client newsletter or request an appointment (like your name, email address, phone number, and physical address). Some of our Services let you access your accounts and your information via other service providers.
Your Stuff. Our Services are designed to make it simple for you to store your files, documents, comments, messages, and so on (“Your Stuff”), collaborate with others, and work across multiple devices. To make that possible, we store, process, and transmit Your Stuff as well as information related to it. This related information includes your profile information that makes it easier to collaborate and share Your Stuff with others, as well as things like the size of the file, the time it was uploaded, collaborators, and usage activity. Our Services provide you with different options for sharing Your Stuff.
Contacts. You may choose to give us access to your contacts (spouse or other company staff) to make it easy for you to do things like share and collaborate on Your Stuff, send messages, and invite others to use the Services. If you do, we’ll store those contacts on our servers for you to use.
Usage information. We collect information related to how you use the Services, including actions you take in your account (like sharing, viewing, and moving files or folders). We use this information to improve our Services, develop new services and features, and protect our users.
Cookies and other technologies. We use technologies like cookies to provide, improve, protect, and promote our Services. For example, cookies help us with things like remembering your username for your next visit, understanding how you are interacting with our Services, and improving them based on that information. You can set your browser to not accept cookies, but this may limit your ability to use the Services.
Marketing. We give users the option to use some of our Services free of charge. These free Services are made possible by the fact that some users upgrade to one of our paid Services. If you register for our free Services, we will, from time to time, send you information about the firm or tax and accounting tips when permissible. Users who receive these marketing materials can opt out at any time. If you do not want to receive marketing materials from us, simply click the ‘unsubscribe’ link in any email.
We sometimes contact people who do not have an account. For recipients in the EU, we or a third party will obtain consent before contacting you. If you receive an email and no longer wish to be contacted by us, you can unsubscribe and remove yourself from our contact list via the message itself.
Bases for processing your data. We collect and use the personal data described above in order to provide you with the Services in a reliable and secure manner. We also collect and use personal data for our legitimate business needs. To the extent we process your personal data for other purposes, we ask for your consent in advance or require that our partners obtain such consent.
We may share information as discussed below, but we won’t sell it to advertisers or other third parties.
Other users. Our Services display information like your name, profile picture, device, and email address to other users in places like your user profile and sharing notifications. You can also share Your Stuff with other users if you choose. When you register your account with an email address on a domain owned by your employer or organization, we may help collaborators and administrators find you and your workspace by making some of your basic information—like your name, workspace name, profile picture, and email address—visible to other users on the same domain. This helps you sync up with workspaces you can join and helps other users share files and folders with you. Certain features let you make additional information available to others.
Workspace Admins. If you are a user of a workspace, your administrator may have the ability to access and control your workspace account. Please refer to your organization’s internal policies if you have questions about this. If you are not a workspace user but interact with a workspace user (by, for example, joining a shared folder or accessing stuff shared by that user), members of that organization may be able to view the name, email address, profile picture, and IP address that was associated with your account at the time of that interaction.
Law & Order and the Public Interest. We may disclose your information to third parties if we determine that such disclosure is reasonably necessary to: (a) comply with any applicable law, regulation, legal process, or appropriate government request; (b) protect any person from death or serious bodily injury; (c) prevent fraud or abuse of our platform or our users; (d) protect our rights, property, safety, or interest; or (e) perform a task carried out in the public interest.
Stewardship of your data is critical to us and a responsibility that we embrace. We believe that your data should receive the same legal protections regardless of whether it’s stored on our Services or on your home computer’s hard drive. We’ll abide by Government Request Policies when receiving, scrutinizing, and responding to government requests (including national security requests) for your data:
Security. We have a team dedicated to keeping your information secure and testing for vulnerabilities. We also continue to work on features to keep your information safe in addition to things like blocking repeated login attempts, encryption of files at rest, and alerts when new devices and apps are linked to your account. We deploy automated technologies to detect abusive behavior and content that may harm our Services, you, or other users.
User Controls. You can access, amend, download, and delete your personal information by logging into your account.
Retention. When you sign up for an account with us, we’ll retain information you store on our Services for as long as your account is in existence or as long as we need it to provide you the Services. If you delete your account, we will initiate deletion of this information after 30 days. But please note: (1) there might be some latency in deleting this information from our servers and back-up storage; and (2) we may retain this information if necessary to comply with our legal obligations, resolve disputes, or enforce our agreements.
Around the world. To provide you with the Services, we may store, process, and transmit information in the United States and locations around the world—including those outside your country. Information may also be stored locally on the devices you use to access the Services.
EU-U.S. Privacy Shield and Swiss-U.S. Privacy Shield. When transferring data from the European Union, the European Economic Area, and Switzerland, We rely upon a variety of legal mechanisms, including contracts with our customers and affiliates. We comply with the EU-U.S. and Swiss–U.S. Privacy Shield Frameworks as set forth by the U.S. Department of Commerce regarding the collection, use, and retention of personal information transferred from the European Union, the European Economic Area, and Switzerland to the United States.
We are subject to oversight by the U.S. Federal Trade Commission. JAMS is the US-based independent organization responsible for reviewing and resolving complaints about our Privacy Shield compliance—free of charge to you. We ask that you first submit any such complaints directly to us via privacy@CountingWorks.com. If you aren’t satisfied with our response, please contact JAMS at https://www.jamsadr.com/eu-us-privacy-shield. In the event your concern still isn’t addressed by JAMS, you may be entitled to a binding arbitration under Privacy Shield and its principles.
If we are involved in a reorganization, merger, acquisition, or sale of our assets, your information may be transferred as part of that deal.
Your Right to Control and Access Your Information
You have control over your personal information and how it is collected, used, and shared. For example, you have a right to:
Your personal information is controlled by CountingWorks, Inc. Have questions or concerns about CountingWorks, our Services, and privacy? Contact our Data Protection Officer at privacy@CountingWorks.com. If they can’t answer your question, you have the right to contact your local data protection supervisory authority.
Third Party Vendors
Amazon Web Services
Updated: June 2020.
strives to ensure that its services are accessible to people with disabilities. has invested a significant amount of resources to help ensure that its website is made easier to use and more accessible for people with disabilities, with the strong belief that every person has the right to live with dignity, equality, comfort and independence.
makes available the UserWay Website Accessibility Widget that is powered by a dedicated accessibility server. The software allows us to improve its compliance with the Web Content Accessibility Guidelines (WCAG 2.1).
Enabling the Accessibility Menu
The accessibility menu can be enabled either by hitting the tab key when the page first loads or by clicking the accessibility menu icon that appears on the corner of the page. After triggering the accessibility menu, please wait a moment for the accessibility menu to load in its entirety.
continues its efforts to constantly improve the accessibility of its site and services in the belief that it is our collective moral obligation to allow seamless, accessible and unhindered use also for those of us with disabilities.
In an ongoing effort to continually improve and remediate accessibility issues, we also regularly scan with UserWay's Accessibility Scanner to identify and fix every possible accessibility barrier on our site. Despite our efforts to make all pages and content on fully accessible, some content may not have yet been fully adapted to the strictest accessibility standards. This may be a result of not having found or identified the most appropriate technological solution.
Here For You
If you are experiencing difficulty with any content on or require assistance with any part of our site, please contact us during normal business hours as detailed below and we will be happy to assist.
If you wish to report an accessibility issue, have any questions or need assistance, please contact customer support.
We keep you up to date on the latest tax changes and news in the industry.
SECURE 2.0 Act
Incentives to Contribute to a Plan
Long-term Part-time Workers
Required Minimum Distributions
Emergency Savings Accounts
Other Distribution Changes
In 2019 Congress passed legislation named the Setting Every Community Up for Retirement Enhancement Act – shortened to the SECURE Act – that included a number of retirement plan changes and enhancements. In late December, 2022, the SECURE 2.0 Act was passed and signed by President Biden. Many of the provisions of SECURE 2.0 were designed to encourage more Americans to save more for their retirement years and make it easier to do so. Some of these changes could impact your retirement plan strategy. Here are some of the highlights of SECURE 2.0:
Contributions to IRAs and Other Plans
Some of the law changes that are meant to encourage more workers to save for retirement include:
Catch-up contributions – Employees age 50 and older are allowed to make additional pre-tax contributions to their 401(k) plans over the regular annual limit. Referred to as “catch-up” contributions, the idea is to get older workers to build up their retirement accounts in their last few years of working. The catch-up amount originally started out many years ago at $1,000, but has grown with annual inflation adjustments to $7,500 for 2023. Starting in 2025, for plan participants age 60 to 63, the catch-up amount increases to at least $10,000 per year and will be inflation-adjusted after 2025.
The amount of the catch-up contribution IRA owners age 50 and over can make has long been $1,000 per year. Starting in 2024, the $1,000 will be indexed for inflation in $100 increments.
Under SECURE 2.0 employers can revise their retirement plans so that employees can choose to have employer-matching and catch-up contributions go into a Roth-style plan with after-tax contributions. Historically, the matching and catch-up contributions have only been allowed as pre-tax contributions. However, starting in 2024, plan participants making more than $145,000 per year from the employer sponsoring the plan can only have their catch-up contributions and the employer-matching amounts go into the employer’s Roth plan. With Roth contributions there is no tax deduction or tax-free wages benefit, but withdrawals from the Roth plan, including investment gains, are tax-free once the account owner reaches age 59½ and has had the plan for at least 5 years.
Financial incentives to contribute to a plan – As noted above, employers can provide matching contributions as a long-term incentive for employees to contribute to a 401(k) plan. However, immediate financial incentives (like gift cards in small amounts) have been prohibited even though individuals may be especially motivated by them to join their employers’ retirement plans. SECURE 2.0 enables employers to now offer de minimis financial incentives, not paid for with plan assets, such as low-dollar gift cards, to boost employee participation in workplace retirement plans.
Long-term part-time workers –The original SECURE Act required employers to allow long-term, part-time workers to participate in the employers’ 401(k) plans. Except in the case of collectively bargained plans, employers maintaining a 401(k) plan have had a dual eligibility requirement under which an employee must complete:
1 year of service (working at least 1,000 hours) or
3 consecutive years of service (where the employee completes at least 500 hours of service).
Starting in 2025, SECURE 2.0 reduces the 3-year rule to 2 years, disregards pre-2021 service for vesting purposes, and extends the long-term part-time coverage rules to 403(b) plans that are subject to the Employee Retirement Income Security Act of 1974 (ERISA). These plans are generally provided by governments or tax-exempt organizations and are sometimes known as “tax-sheltered annuities.”
Automatic enrollment required – Most employees under-save for their retirement. Some don’t participate at all in their employer’s plan. To encourage greater participation, effective for plan years beginning after 2024, SECURE 2.0 requires 401(k) and 403(b) plans to automatically enroll participants in the respective plans upon becoming eligible, although employees may opt out of coverage. The initial auto-enrollment amount is at least 3% but not more than 10% of an employee’s compensation. Each year thereafter that amount is increased by 1% until it reaches at least 10%, but not more than 15%.
All 401(k) and 403(b) plans in existence before December 29,2022 are not required to have automatic enrollment, but some of these employers may want to do so anyway, or may have already established auto-enrollment arrangements. Also exempt from mandatory enrollment are small businesses with 10 or fewer employees; SIMPLE Plans; employers that have been in business for less than three years; and church and government plans.
Distributions from IRAs and Retirement Plans
The SECURE 2.0 Act made significant changes to when distributions must or may be made from retirement plans, including the following:
Required Minimum Distributions (RMD) – While some individuals would prefer to keep their tax-advantaged contributions to retirement plans and traditional IRAs growing until their death so that more money goes to their heirs, Congress doesn’t see it that way and requires distributions to be made. As far back as the 1960s distributions had to be made once the account owner reached age 70½, but the SECURE Act extended the age to 72, and SECURE 2.0 changes it again, to 73 as of 2023. But the language of the SECURE 2.0 bill is a bit awkward and can be interpreted that because someone who turned 72 in 2022 was required to take a 2022 distribution, the fact that they turn 73 in 2023 doesn’t let them claw back the 2022 distribution already made or skip a 2023 distribution. So, unless the wording of the tax code is changed in a technical corrections bill, just those who turn 72 in 2023 will be excused from being required to take a 2023 distribution. Starting in 2033 the distribution beginning age increases to 75.
Regardless of the required beginning date, if a taxpayer so chooses, he or she can delay the first year’s RMD until the second year, thus making the distribution includible in the second year’s tax return. This is sometimes desirable if the taxpayer has substantial wages or other income in the year the mandatory distribution age is reached and expects less income the next year. In this situation, by delaying the distribution to the second year the tax bracket could be substantially lower. If the taxpayer chooses that option, then:
The first year RMD must be taken by April 1 of the following year, and
The taxpayer must also take the second year RMD distribution by December 31 of year two, thus doubling up the distributions in year two.
RMD Penalties – Existing law sets the formula for computing the minimum amount that must be withdrawn once the required beginning age is reached, and to enforce the requirement, there has been an egregious excise tax (commonly referred to as a penalty) of 50% of the amount that should have been withdrawn and wasn’t.
SECURE 2.0 reduces the excise tax for failure to take required minimum distributions from 50% to 25%, starting for 2023. If a failure to take an RMD from an IRA is corrected in a timely manner, the 25% penalty rate is reduced to 10%.Timely means submitting a corrected return either in the second year after the RMD was missed or before the IRS assesses a penalty, whichever comes first.
Prior to SECURE 2.0, IRS offered administrative relief from the penalty for those who failed to take their RMD whereby the taxpayer could file a request for relief using IRS Form 5329 along with an explanation why the correct amount of distribution wasn’t made. Generally, the IRS would waive the penalty if the taxpayer had immediately taken steps to rectify the shortfall once it was discovered and had a reasonable excuse for why the RMD hadn’t been made. Reasonable excuses included health problems, a death in the family, confusion about the rules, or receiving erroneous advice from an investment advisor or tax professional. There is no language in SECURE 2.0 that removes this method for eliminating the penalty, but the IRS may not be as inclined to waive the penalty as in the past now that the penalty is lowered to 10%.
Emergency Savings Accounts - Though individuals can save on their own, far too many fail to do so. According to a report by the Federal Reserve, almost half of Americans would struggle to cover an unexpected $400 expense. Many are forced to dip into their retirement savings. A recent study found that, in the past year, almost 60% of retirement account participants who lack emergency savings tapped into their long-term retirement savings, compared to only 9% of those who had at least a month of emergency savings on hand.
Congress decided that separating emergency savings from a person’s retirement savings account will provide participants a better understanding that one account is for short-term emergency needs and the other is for long-term retirement savings, thus empowering employees to handle unexpected financial shocks without jeopardizing their long-term financial security in retirement through emergency hardship withdrawals.
To that end, SECURE 2.0 provides employers the option to offer retirement plan-linked emergency savings accounts to their non-highly compensated employees. Employers will need to amend their plans before they can offer these accounts. Some of the details:
Employers may automatically opt employees into these accounts at no more than 3% of their salary, and the portion of an account attributable to the employee’s contribution is capped at $2,500 (or lower as set by the employer).
Once the cap is reached, the additional contributions can be directed to the employee’s Roth defined contribution plan or stopped until the balance attributable to contributions falls below the cap.
Contributions are made on a Roth-like basis and are treated as elective deferrals for purposes of retirement matching contributions with an annual matching cap set at the maximum account balance – i.e., $2,500, or lower as set by the plan sponsor.
The first four withdrawals from the account each plan year may not be subject to any fees or charges. At separation from service, employees may take their emergency savings accounts as cash or roll it into their Roth defined contribution plan or IRA.
Penalty-Free Withdrawals – Domestic Abuse - A domestic abuse survivor may need to access his or her money in their IRA or retirement account for various reasons, such as escaping an unsafe situation. SECURE 2.0 allows retirement plans to permit participants that self-certify that they experienced domestic abuse to withdraw a small amount of money that will not be subject to the 10% early withdrawal penalty that applies to plan withdrawals prior to age 59½. These withdrawals cannot exceed the lesser of $10,000, or 50% of the present value of the nonforfeitable accrued benefit of the employee under the plan. To be eligible, the distribution must be made during the 1-year period beginning on any date on which the individual is a victim of domestic abuse by a spouse or domestic partner.
Domestic abuse means physical, psychological, sexual, emotional, or economic abuse, including efforts to control, isolate, humiliate, or intimidate the victim, or to undermine the victim’s ability to reason independently including by means of abuse of the victim’s child or another family member living in the household.
While the early withdrawal penalty won’t apply to domestic abuse distributions, regular tax does apply. However, the domestic abuse survivor may redeposit the amount that was withdrawn into their IRA or the employer’s plan at any time up to 3 years after the date on which the distribution was received, and then file an amended return to recover the tax that was previously paid on the distribution.
Other distribution rules changes – The penalty when an individual takes an early distribution (before age 59½) from their traditional IRA or employer’s plan is 10% of the amount withdrawn. There are many exceptions to the penalty and SECURE 2.0 added some new ones in addition to those already on the books. Briefly these new exceptions include:
Individuals in federally declared disaster areas can now withdraw up to $22,000 from an IRA or retirement plan with no penalty. The tax on the distribution can be paid over 3 years.
As of 2023, an employee who has been certified by a physician as being terminally ill and who presents evidence of that diagnosis to the plan administrator can make a penalty-free withdrawal from their retirement plan.
As of December 30, 2025, penalty-free distributions up to $2,500 can be made to cover long-term care expenses.
The SECURE 2.0 Act changes discussed in this article are only a few of the more than 90 provisions in the Act that affect retirement plan participants and employers offering the plans over the next few years. If you have questions about how your retirement contributions and distributions – and your overall strategy for a comfortable retirement – will be impacted, please contact this office.
Each month, we will send you a roundup of our latest blog content covering the tax and accounting tips & insights you need to know.
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