Retirement tax rules just changed

The One Big Beautiful Bill created a temporary Senior Bonus Deduction that allows taxpayers age 65 and older to claim an additional $6,000 per qualifying individual (up to $12,000 for married couples where both spouses qualify) for tax years 2025 through 2028, and the provision applies whether a filer itemizes or uses the standard deduction (irs.gov). The senior deduction phases out by modified adjusted gross income starting at $75,000 for single filers and $150,000 for joint filers and is fully phased out at higher thresholds reported in guidance (AARP analysis notes phaseouts starting at $75,000/$150,000 and full phaseout levels referenced in public guidance). (www-pi.aarp.org) The Treasury and IRS announced in Announcement 2026‑7 that certain final regulations amending required minimum distribution (RMD) rules will apply no earlier than the distribution calendar year that begins at least six months after those final regulations are published in the Federal Register, leaving taxpayers and plans to follow a reasonable, good‑faith interpretation until the final regs take effect. (irs.gov) Statutory RMD start ages continue to be set by SECURE legislation (with the RMD age already moved to 73 for many and scheduled to reach 75 for later birth cohorts), per current IRS retirement‑topics guidance. (irs.gov) SECURE 2.0 cut the excise tax on missed RMDs from 50% to 25%, with a further reduction to 10% available if the missed distribution is corrected within the correction window (typically two years), a change that materially alters the penalty calculus for late distributions. (fidelity.com) Treasury and the IRS issued final regulations on mandatory Roth catch‑up contributions on Sept. 15, 2025, and those rules state that catch‑up contributions by participants whose prior‑year FICA wages exceed $145,000 (indexed for inflation) must be designated as Roth (after‑tax) contributions, with the regulations generally applying to contributions in taxable years beginning after Dec. 31, 2026 while permitting earlier reasonable implementation by plans. (irs.gov) (wtwco.com) SECURE 2.0 also created an optional “super catch‑up” for participants ages 60–63 that increases the catch‑up limit to the greater of $10,000 or 150% of the regular catch‑up amount (resulting in a practical 2025 example limit of $11,250 for many plans), with amounts indexed for inflation thereafter. (tsp.gov) (mercer.com) IRS final catch‑up regulations include administrative details plan sponsors must follow, including rules that allow aggregation of wages received from separate common‑law employers when determining whether a participant meets the FICA‑wage threshold for the Roth catch‑up requirement and guidance on deemed Roth elections and correction procedures. (irs.gov) Households with both spouses age 65+ can reduce taxable income by up to $12,000 under the 2025–2028 senior deduction window ( IRS guidance and analyst notes quantify the four‑year opportunity), creating a discrete cohort (age‑65+ filers under MAGI phaseout thresholds) for focused outreach and tax‑timing analysis. (irs.gov) Employed clients aged 60–63 who remain eligible for employer plans may legally increase 2025 catch‑up contributions to the greater of $10,000 or 150% of the then‑current catch‑up limit (about $11,250 in 2025), while older, higher‑wage participants with prior‑year FICA wages above $145,000 will be required to make catch‑up contributions as Roth deferrals beginning under the new regs’ applicability timeline. (tsp.gov) (wtwco.com)