January 1st, 2020 was the start of a new law that was written on December 20th, 2019. This new law would be known as the SECURE Act. Secure is acronym for Setting Every Community Up for Retirement Enhancement. The SECURE Act is geared toward making retirement easier for Americans. But what does this mean for you and your retirement plans? Will it help with planning for the future? Let’s dive into the key details of the Act.
Increased requirement minimum distributions age (RMD)
Due to technological advances, advancement in medicine, and other modern conveniences, many American’s are living longer on average and are retiring at a later age. This is a good thing overall, so the RMD age was changed from 70.5 to 72. So if you are turning 70.5 by January 1st, 2020, this age increase applies to you. If your planning to take your distribution this year for your accounts (401(k)s, 403(b)s, IRAs, etcetera), then be sure to seek help with your retirement planning.
Did you know that The Financial Guys can help you with retirement planning? If you are unsure about the SECURE Act or you want to start planning for retirement, then click the link below to learn more about our retirement planning services.
Retirement Planning Assistance
Inherited IRA distributions 10-year claim cap
Before the SECURE Act, the beneficiaries of an inherited IRA could stretch their distributions and tax payments out over their life or continue to pass that money on tax-deferred to the next generation. However, the new law requires these beneficiaries to withdraw all assets from the inherited IRA or 401(k) plan within ten years following the death of the account holder.
There are exceptions to this rule that includes assets left to a surviving spouse, a minor child, a disabled or chronically ill beneficiary, and for beneficiaries who are less than ten years younger than the original owner. Again, we recommend meeting with your advisor to discuss your estate plan and ensure your plans for beneficiaries and loved ones take this change into account.
Maximum age limit for traditional IRA contributions eliminated
Going back to what we said above about increasing average age limits in which Americans are retiring, the maximum age limit for IRA contributions is no more. The previous age before this change was 70.5. How does this benefit you? Well, now you can make contributions that align more closely with your 401(k) or Rother IRA contributions.
Inherited IRA distributions 10-year claim cap
Before the SECURE Act, the beneficiaries of an inherited IRA could stretch their distributions and tax payments out over their life or continue to pass that money on tax-deferred to the next generation. However, the new law requires these beneficiaries to withdraw all assets from the inherited IRA or 401(k) plan within ten years following the death of the account holder.
There are exceptions to this rule that includes assets left to a surviving spouse, a minor child, a disabled or chronically ill beneficiary, and for beneficiaries who are less than ten years younger than the original owner. Again, we recommend meeting with your advisor to discuss your estate plan and ensure your plans for beneficiaries and loved ones take this change into account.
What does this mean for you?
All this information can be a lot to take in. If you want to read the SECURE Act document in greater detail, Click Here for the PDF. Things have changed, and it may affect you. But, you don’t have to go it alone. We are here to help you. We know that sometimes, these changes can get confusing. Let us do the hard work for you. If you are concerned about any of this, click the link below and fill out the form and a member of our team will get in touch with you as soon as possible.
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The Financial Guys and Independent Solutions Wealth Management LLC. are not affiliates of Peak Brokerage Services, LLC.”
