How will it affect you?
The “Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019” that was passed in December is the most significant legislative change affecting tax-qualified retirement savings since 2006. It is widely expected that this Act will improve the retirement security of millions of Americans.
The top 6 things you need to know about the SECURE Act:
- Increases the required minimum age to begin taking distributions from a retirement plan to 72 from 70-1/2
- Allows working adults over age 70-1/2 to make ongoing contributions to IRAs
- Reduces time limits for distributions from inherited IRAs to 10 years
- Creates new 401(k) plan coverage and access for small employers
- Allows employers to make their retirement plan available to permanent part-time workers
- Requires lifetime income options for participants of 401(k) plans
- Changes 529 savings plan provisions to include the expansion of qualified expenses to apprenticeship programs and more flexibility in loan repayments
401(k) participants will now see on their statements what income might be generated from their account balance. This will provide a reality check for how much savings are needed in order to retire. And, you may be able to select an income annuity right in your employer plan to provide that income.
There are many planning opportunities with the passage of the SECURE Act.
- Consider if a Roth IRA conversion is preferable to your heirs having to take taxable distributions within 10 years rather than over their lifetime
- Create a plan for receiving taxable IRA distribution within the required 10 year period
- Continue to consider non-taxable qualified charitable distributions from IRAs which remain available at age 70-1/2
- Continue to make IRA contributions after age 70 if you’re still working
- Review potential 529 plan distributions to take advantage of changes
It is more important than ever to plan your retirement so that you can gain the most benefit from these exciting new changes. Why not start today?
Laura Mickels has spent more than 30 years working for investors with both Wall Street and independent firms. CochranMickels Retirement Specialists provides personalized planning and investment services to individuals approaching and in retirement.
These are the opinions of Laura Mickels and not necessarily those of Cambridge, are for informational purposes only, and should not be construed or acted upon as individualized investment advice.