The recent passage of the SECURE ACT may be the most important legislation to affect retirees since the Pension Protection Act of 2006. As is the case with most legislation these days, it was attached to the volumes of pages that avoided a government shutdown at the end of 2019. I wanted to summarize this game changing legislation for our readers as many people are not yet aware of this.
The Setting Every Community Up for Retirement Enhancement (SECURE) Act was signed into law on December 20th, 2019 and became effective January 1st, 2020. What it entails:
1) Required minimum distributions on IRA’s are now triggered at age 72 instead of age 70 ½
2) Inherited IRA’s are now required to be liquidated up to 10 years instead of the option of over a beneficiary’s lifetime
3) Contributions can now be made to IRA’s after age 70 ½ subject to earnings
4) $5000 tax free IRA withdrawal upon the birth or adoption of a child
5) It appears to loosen the rules around Annuities inside retirement plans as the declining pension environment continues.
This is a quick overview of this ground-breaking legislation. We will continue to get our arms around how this will affect our clientele.