The retirement landscape is constantly in flux as Americans adapt to the ever-changing financial environment. On December 20, 2019, President Donald Trump signed the Setting Every Community Up for Retirement Enhancement (SECURE) Act as an effort to reshape and modernize our country’s retirement system. With most of its provisions effective this year, here are some key influencing factors that this new legislation could have on your retirement:¹

 

• Inherited IRA distributions must be taken within 10 years. Prior to 2020, if you inherited an IRA or 401(k), you could “stretch” your distributions over your lifetime. Under the new law, “stretch” IRAs now loses its flexibility and are required to be withdrawn within 10 years following the death of the account holder.
• Required minimum distributions (RMDs) age increased to 72 from 70 ½, effective to those reaching age 70 ½ after December 31, 2019. Americans are working longer and can now defer withdrawing until age 72. If you turned 70 ½ last year and have already began withdrawals, the new rule does not impact you.
• No more age restrictions on IRA contributions. With Americans living longer and working past the traditional retirement age, they’re now able to contribute indefinitely. This means you can continue contributing to your traditional IRA past age 70 ½ as long as you’re still earning income.
• Long-term part-time workers can now participate in 401(k) plans. The new act expands access allowing part-timers who have worked 500 hours at the job over three consecutive years to be participants in 401(k) plans.

 

The SECURE Act is widely considered to be the biggest set of retirement reforms in more than a decade. As rules on retirement changes, your approach to retirement planning should too. We’re a team of professionals dedicated to client results.

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¹ https://www.investopedia.com/what-is-secure-act-how-affect-retirement-4692743