The SECURE Act

The SECURE Act

What IRA Holders Should Know

SECURE Act

 

What’s the Focus of the Act?

► Modifies RMD rules for retirement plans

► Provides broader access to retirement plans

► Increases lifetime income options in retirement plans

The Key Impacts

RMD START DATE EXTENDS BY 2 YEARS

The Required Minimum Distribution (RMD) start date extends by two years, from age 70½ to 72 years. So, your IRA investment will get two more years to grow.

MORE ROTH PLANNING OPPORTUNITIES

Because the RMD starts at age 72, you can do Roth conversions for the additional two years without any impact of distributions.

ADDITIONAL SAVINGS OPPORTUNITIES

You can contribute to a tax-deductive IRA after you hit 70½ years of age. If you continue working in your 70s, you have the option to put money in a deductible IRA.

LIFETIME INCOME FROM RETIREMENT PLANS

Employers with retirement saving plans are encouraged to allow their employees to convert their retirement savings into guaranteed lifetime income, through annuities.

REASON TO REVIEW BENEFICIARY DESIGNATIONS

You have to review the beneficiary designations of your IRA to ensure that they align with the new beneficiary rules, which mandate IRA beneficiaries to distribute all of their inherited IRA within 10 years of the death of the owner (with a few exceptions).

REASON TO REVIEW TRUSTS (As Beneficiaries)

You should review the terms and conditions of any trust as a beneficiary of your IRA, if you have any, to ensure they align with the new rules. Because the Act mandates that all of the money in the IRA has to be withdrawn in 10 years after the death of the owner, the beneficiary trusts will not be able to stretch out the tax benefits of the inherited IRA.

Sources

https://www.forbes.com/sites/nextavenue/2020/12/31/6-ways-the-secure-act-may-impact-your-retirement/#4995d86f672a

https://www.schwab.com/resource-center/insights/content/new-retirement-savings-law-6-things-you-should-know-about-secure-act

https://www.fidelity.com/learning-center/personal-finance/retirement/understanding-the-secure-act-and-retirement

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