The SECURE Act Passed. What Does That Mean?

I’ve written about the SECURE (Setting Every Community Up for Retirement Enhancement) Act a number of times over the past year or so. I’m writing now following it’s passing Congress last week as part of the year-end spending bill. Now that President Trump has signed it into law, it goes into effect on January 1, 2020. The legislation is a relatively large overhaul to retirement savings accounts. The two biggest changes are to contributions and required minimum distributions (RMDs). First off, the new law eliminates the age limit for traditional IRA contributions. This means that if you are still working, you can continue to contribute to a traditional IRA no matter how old you are. This can be really helpful for people who plan on working well past 70. As for RMDs, the legislation raises the age for beginning RMDs from 70 1/2 to 72. Again, this is beneficial for people who plan to work past 70 as it prevents them from having to tap into retirement accounts too early. Another big change is the ending of the Stretch IRA, which will be replaced with a ten year rule. The rule will be in place for most beneficiaries and requires accounts to be emptied by the end of the tenth year after the year of death. The change only goes into effect for deaths that occur on or after January 1, 2020. As with any legislation, the SECURE Act includes more than just the above mentioned and I suggest you read up on what the legislation offers and how it could impact your retirement plans and accounts.