How Will Changes to the SECURE Act Affect Your Retirement?
- January 2, 2020
Starting January 1, 2020, the Setting Every Community Up for Retirement Enhancement (SECURE) Act significantly changes how your IRAs will be treated. The new bill raises the maximum age you must begin required minimum distributions (RMD’s) and eliminates the ability of your heirs to take advantage of stretch IRA’s. It also increased premature access to tax-advantaged accounts and to contribute at older ages.
New bill highlights:
- Eliminates the stretch IRA, which had allowed non-spouses inheriting retirement accounts to stretch out disbursements over their lifetimes. The new rules will require a full payout from the inherited IRA within 10 years of the death of the original account holder, however, does not require minimum distributions during the 10 year period.
- Postpones the age at which retirement plan participants need to begin required minimum distributions (RMDs), from 70½ to 72, for those who are not 70½ by the end of 2019.
- Income ranges for determining eligibility to make deductible contributions to traditional IRAs, Roth IRAs and to claim the Saver’s Credit all increased for 2020. Meaning, the income phase-out range for married couples filing jointly who make contributions to a Roth IRA is $196,000 to $206,000, up from $193,000 to $203,000. Consumers can visit the IRS’s website for more information on the contribution changes.
- Allow the use of tax-advantaged 529 accounts for qualified student loan repayments (up to $10,000 annually).
- Permit penalty-free withdrawals of $5,000 from 401(k) accounts to defray the costs of having or adopting a child.
Whenever there is a change that affects your assets, it’s important to schedule an appointment to review your estate plan and possibly revise your documents. Contact us today for an appointment.