Securing Your Retirement – January 22, 2020

At the end of 2019, Congress passed the SECURE Act, which makes dramatic changes to the laws that govern retirement accounts.

Changes include—

• The age for required minimum distributions (RMDs) from retirement accounts is raised from 70 ½ to 72, if you turned 70 ½ on or after January 1, 2020.
• One may contribute to a traditional IRA past 70 ½ years old, if one is still working.
• Part-time workers gain better access to 401(k) accounts.
• 529 plans may now be used to pay down student loans – up to $10,000.
• It will be easier to offer annuities in 401(k) accounts.
• Plan participants will begin receiving a monthly projected income statement based on current retirement assets.
• Within the first year, parents may withdraw up to $5,000 penalty-free from an IRA or an employer-sponsored retirement plan to pay for adoption or birth expenses. Taxes will be incurred at the marginal rate.
• The new law encourages small business owners to join forces to offer 401(k) plans. 

We applaud many of these measures. But, in order to pay for various provisions of the new law, one controversial change was enacted.

• With a few exceptions, assets from an inherited IRA must be distributed within 10 years rather than over the lifetime of the beneficiary.

Investor’s corner

The synopsis provided is simply a summary. The changes are significant, and some are long overdue.

Feel free to talk with your tax advisor about any tax issues, or we would be happy to answer any questions or discuss various strategies in relation to the new act.

Created 2020-01-22 16:09:25