Weekly Update
We pride ourselves in providing ongoing education to the community.
Changes are coming: Retirements Savings Law
The 1920’s brought significant change to American culture as we know it. From jazz bands and flappers to dramatic political change and The Great Depression, it was a decade for the record books. With 2020 right around the corner, we too will begin experiencing changes, specifically when it comes to navigating the laws of retirement. The SECURE Act was included in the year-end package of bills passed in Washington. Below you will find a number of changes that Congress has recently decided on that will affect individuals that are both in retirement and nearing retirement.
1. RMD Age. Required minimum distributions (RMDs) refer to the required amount of money you must withdraw from your retirement account each year. This currently starts when you reach age 70 ½. Starting in 2020, the new law state that the RMD age is now 72. This will apply to people who turn 70 ½ after December 31, 2019.
2. Contributions to traditional IRA after 70 ½. This change in the law allows individuals to contribute to their traditional individual retirement account (IRA) at any age, as long as they have earned income in that tax year.
3. Significant changes to Inherited IRAs. Currently, a non-spousal inherited IRA requires a required minimum distribution using the Single Life Table, provide by the IRS. This is commonly known as a Stretch IRA. The new eliminates the Stretch IRA option and mandates that the entirety of the inherited IRA is distributed within 10 years of inheritance. This provision has the potential to significantly impact estate plans across the country and will be an immediate point of discussion in client meetings. There are exceptions for spouses, minor children and disabled individuals less than 10 years younger than the decedent, but the vast majority of inherited IRAs in 2020 and beyond will be affected. This change does not affect existing inherited accounts.
Having an advisor to keep you up to date to the ever changing laws regarding retirement savings is pertinent to ensure you stay on the right track through retirement. To discuss the changes above along with the other changes included in The SECURE Act, give us a call at (740) 972-1196.