For This month’s Insights we are sharing what we are learning on what was mentioned in our January newsletter about Retirement law changes.
The “Setting Every Community Up for Retirement” also known as the SECURE ACT was signed into law on December 20, 2019 and the law took effect on January 1, 2020.
What does that mean to you? There are some significant changes to be aware of and we want you to be aware of these changes as soon as possible. Here are some of the key Highlights for individuals³
- Increased Required Minimum Distribution (RMD) ages: Changes the age for starting RMD’s from 70.5 to age 72 for individuals who attain age 70.5 after 2019. This applies to all Qualified plans such as IRA’s, 401k’s and other defined contribution plans.
- Allowing Post age 70.5 IRA contributions if an individual has earned income.
- Adoption or Birth of a child exception: This allows a person to withdraw from their Qualified plan for birth or adoption up to $5,000 without paying the 10% federal additional tax for early withdrawal. Couples can withdraw each, allowing up to $10,000 in total.
- Inherited IRA’s Distributions Limitation (also known as “stretch” provisions): Limits the maximum distribution period for most Non-spousal beneficiaries to a maximum of 10 years from the death of an IRA owner. There are exceptions, but historically that “stretch” could be over a beneficiar(y)s lifetime and now the accounts have to be paid out in a shorter time frame.
There are many other provisions in the SECURE ACT, this is just a few of the highlights for informational purposes and is not intended to be Fiduciary, Tax or Legal advice.
We hope that this information is helpful for you and highlights the continued need of reviewing your goals and addressing the impacts of these changes in order to create the best chances for your success.