Interpreting the SECURE Act: How New Legislation May Affect Your Retirement
As we usher in 2020, we want to update you on some important legislation that was passed and signed into law at the end of 2019. The SECURE Act has many potential implications to your financial picture. As your financial partner, Greenwood Gearhart is committed to ensuring that you maintain compliance within your specific circumstances. We have implemented SECURE Act updates into our methods for planning for and managing your assets and will proactively contact you if anything materially impacts your specific situation. Like most legislation, there are many details to sift through, but we thought we would offer a few key highlights for your knowledge:
First, if you will reach age 70.5 after December 31, 2019, you may choose to delay taking required minimum distributions from your retirement accounts until age 72. This delay will ultimately serve as a benefit to you and is a detail we will help to guide you through.
Another important detail we will help you navigate relates to Inherited IRA accounts. In prior years, the IRS allowed great flexibility in determining how beneficiaries of Inherited accounts met withdrawal requirements. The SECURE Act now requires many Inherited IRA beneficiaries to withdraw funds within 10 years of the account’s inheritance. The goal of this legislation is to ensure that the IRS receives taxes due on those withdrawals in an accelerated timeline. Your unique circumstances ultimately determine the required pace of withdrawals and we are here to help you maintain compliance.
A final highlight we’d like to include is the elimination of age limit for making Traditional IRA contributions. In previous legislation, individuals were no longer eligible to make contributions to Traditional IRAs once they reached 70.5. The SECURE Act effectively removes this limit, benefiting those who seek to work past age 70 who might desire continued tax-deferred savings toward retirement.
We strive to provide you peace of mind and simplify complex topics, and are proactively monitoring changes in retirement planning legislation in an effort to provide you timely insights unique to your financial picture. If you have questions about your specific circumstances, please contact any member of our team for assistance.
For more information on all of the relevant changes to the SECURE Act, Charles Schwab has published an insightful article that may be found here through the link below.