What Does The Secure Act Mean For You?

On December 20th, 2019, a new law was written and taken into effect on January 1st, 2020. The SECURE Act, also known as Setting Every Community Up for Retirement Enhancement, aims to make retirement easier for Americans. But what does this all mean for you? Will it impact your retirement plans? Will it help with retirement planning? We will explorer some of this Act’s details.

Increased required minimum distributions age (RMD)

Due to technological advances, advancement in medicine, and other modern conveniences, many American’s are living longer on average and are retiring at a later age. This is a good thing overall, so the RMD age was changed from 70.5 to 72. So if you are turning 70.5 by January 1st, 2020, this age increase applies to you. If your planning to take your distribution this year for your accounts (401(k)s, 403(b)s, IRAs, etcetera), then be sure to seek help with your retirement planning.

Speaking of retirement planning, Independent Solutions Wealth Management can help you. You may not be ready for the SECURE Act, but we are. Reach out to us by clicking the button below and fill out our secure form.

Maximum age limit for traditional IRA contributions eliminated

Going back to what we said above about increasing average age limits in which Americans are retiring, the maximum age limit for IRA contributions is no more. The previous age before this change was 70.5. How does this benefit you? Well, now you can make contributions that align more closely with your 401(k) or Rother IRA contributions.

Increased access to annuities within 401(k) plans

Annuities are now accessible through a 401(k) plan to encourage more employers to offer lifetime income options. However, if you are considering an annuity, the product is selected by the employer and not the employee. We strongly recommend that you review your options with your financial professional when getting help with retirement planning.

Inherited IRA distributions 10-year claim cap

Before the SECURE Act, the beneficiaries of an inherited IRA could stretch their distributions and tax payments out over their life or continue to pass that money on tax-deferred to the next generation. However, the new law requires these beneficiaries to withdraw all assets from the inherited IRA or 401(k) plan within ten years following the death of the account holder.

There are exceptions to this rule that includes assets left to a surviving spouse, a minor child, a disabled or chronically ill beneficiary, and for beneficiaries who are less than ten years younger than the original owner. Again, we recommend meeting with your advisor to discuss your estate plan and ensure your plans for beneficiaries and loved ones take this change into account.

What’s this all mean for you?

All this information can be a lot to take in. Things have changed, and it may affect you. But, you don’t have to go it alone. We are here to help you. We know that sometimes, these changes can get confusing. Let us do the hard work for you. Click the button and fill out the form to find an advisor near you, and we will take care of this one step at a time.

Investment Advisory Services offered through Independent Solutions Wealth Management, LLC, an SEC Registered Investment Adviser.
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