The Setting Every Community Up for Retirement Enhancement (SECURE) Act, signed into law December 20, 2019, includes many common sense and overdue provisions that may enhance retirement savings along with some provisions that are not favorable. Some of the key provisions – in approximately the order of impact to our clients-include:
- Eliminates the Stretch IRA for most beneficiaries. In lieu of “stretching” distributions of inherited IRA’s out over many years, the entire account must now be distributed in 10 years. If you have small children or your trust is your IRA beneficiary, we need to talk!
- Inherited Roth account must be fully distributed in 10 years (tax free).
- The required minimum distribution (RMD) age for retirement accounts got bumped to 72 (up from 70 1/2). Note that if you already took an RMD in 2019, you do not get to skip a year.
- Allows contributions to an IRA past the age of 70 1/2. (This only applies if you have earned income.)
- Allows long-term, part-time worker to participate in 401(k) plan.
- Offers more options for lifetime income strategies (read: annuities within 401k plans).
- Permits parents to withdraw up to $5,000 from retirement accounts penalty-free within a year of birth or adoption for qualified expenses.
- Allows parents to withdraw up to $10,000 from 529 plan to repay student loans.