The SECURE Act (official law title is Setting Every Community Up for Retirement Enhancement Act) was signed into law on Friday, December 20, 2019. Many of these changes are effective on January 1, 2020, so this is a great time to review your situation with your financial advisor.
Here are the major changes created by the new law:
72 is the new 70½ – Required Minimum Distributions (RMDs) Will Start at Age 72, not 70½
Starting January 1, 2020, retirees will need to start withdrawing money from their traditional IRA at age 72, a change from the current withdrawal requirement of age 70½.
Keep On Contributing – Clients Can Contribute to Their Traditional IRA After Age 70½
Beginning in the 2020 tax year, the new law will allow retirees to contribute to their traditional IRA in the year they turn 70½ and beyond, provided they have earned income.
10-years for Inherited Retirement Accounts
Upon death of the account owner, distributions to individual beneficiaries must be made within 10 years. There are exceptions for spouses, disabled individuals, and individuals not more than 10 years younger than the account owner. Minor children who are beneficiaries of IRA accounts also have a special exception to the 10-year rule, but only until they reach the age of majority.
Favorable Treatment of Adoption/Birth Expenses
The new law allows penalty-free withdrawals from retirement plans for birth or adoption expenses, up to certain limits.
There are many more aspects and provisions to the new law. Please see your financial advisor for more information. RFG Advisory and Private Client Services do not provide tax advice.
Securities offered through Private Client Services, member FINRA/SIPC. Investment advice offered through RFG Advisory, a Registered Investment Advisor. RFG Advisory and Private Client Services are unaffiliated entities
