2023 Updates – Tax, Retirement Plans, and Continuing Education

In general, most FINRA, MSRB, and NASAA licensing examinations will not test the specific dollar limits for contributions to retirement plans; however, there are certain numbers that are relevant and should be considered. Many of the contribution levels are indexed to inflation (often with annual increases). Please be aware that your exam may still reference the 2022 amount. Below is a summary of some of the new limits for 2023, along with other relevant exam updates.

Individual Retirement Accounts (IRAs)

For 2023, the maximum contribution allowed for IRAs increases from $6,000 to $6,500. However, for individuals who are age 50 or older, the catch-up provision remains at $1,000. Therefore, individuals who are age 50 or older can each contribute $7,500 into their IRA. Individuals who file a joint tax return can contribute a maximum of $13,000 (or $15,000 if both people are age 50 or older).

SECURE Act 2.0

Effective 2023, the age for a required minimum distribution (RMD) will increase from age 72 to age 73. The age for RMD is scheduled to increase to age 75 by the year 2033. Also effective in 2023, the excise tax penalty has been reduced from 50% to 25% of the RMD amount if a person fails to take his RMD by the required age.

In the past the IRA catch-up contribution ($1,000) for individuals who are age 50 or older has not been indexed to inflation. However, beginning in 2024, this amount will be indexed to inflation.

GIFT TAX EXCLUSION 

For 2023, the annual gift tax exclusion will increase from $16,000 to $17,000. As a result of this increase, the contribution to a 529 college savings plan increases to $17,000 ($34,000 for joint gifts). Since a 529 plan may be front-loaded with five-years’ worth of contributions, a contribution of up to $85,000 ($170,000 for joint gifts) can be made to a 529 plan and no gift tax will be owed as long as the special election is made to spread the gift evenly over a five-year period.

SECURITIES INDUSTRY CONTINUING EDUCATION TRANSFORMATION

Beginning on January 1, 2023, registered persons will be required to complete the Regulatory Element of CE annually by December 31. All participants will receive content that’s specifically tailored to each representative and principal registration category that they currently hold. Participants who fail to complete the requirement by December 31 will be automatically designated as “CE Inactive” by FINRA.

This annual requirement replaces the previous provision which required individuals to complete their Regulatory Element of CE at the two-year anniversary of their initial registration and every three years thereafter.

FINRA has also established a Maintaining Qualifications Program (MQP). With this program, individuals who terminate any of their representative or principal registrations are able to maintain their qualifications by completing their annual CE requirement. Individuals who utilize this program are given a maximum of five years to reregister with a member firm without being required to requalify by exam. To be eligible for the MQP, individuals must meet the following conditions:

  1. They must have terminated the registration category on or after March 15, 2022.
  2. They must have been registered in the terminated registration category for at least one year immediately prior to the termination in that category.
  3. They must elect to participate in the MQP within two years from the date of termination.
  4. They must complete all of their CE requirements by the due dates.

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