The bipartisan legislation, signed by President Trump on December 25, 2019, called the Secure Act, now law, makes it easier for employers to offer retirement savings accounts and for retirement plans to provide people with annuities, or guaranteed lifetime income products. The law also scraps age caps for 401(k) contributions and provides new retirement-savings tools and support for part-time workers, small businesses, parents and other groups. The SECURE Act makes significant changes to IRAs, and retirement plans. It is important to know that the new act:
• Encourages more small businesses to offer retirement plans and expands the availability of these plans to employees.
• Increases the beginning age for Required Minimum Distributions (RMDs) from 70½ to 72 for individuals turning 70½ in 2020 and later.
• Eliminates a maximum age for Traditional IRA contributions (previously, there was a restriction at the age of 70½).
• Significantly alters inherited (stretch) IRA distribution calculations and schedules for non-spouse beneficiaries for any new inherited situations starting in 2020. As you sort through the potential tax, retirement and estate planning implications, this is why your annual checkup with your advisor is important.