SECURE Act 2019

The SECURE act has been in the news a lot recently. Don’t worry, we have you covered; here are the basic changes you need to know:

1. Increases the Required Minimum Distribution (RMD) age from age 70 ½ to age 72 for all retirement accounts subject to RMDs (Must be under 70 ½ as of 1/1/2020).

2. Eliminates the “Stretch IRA” by mandating inherited IRAs, for non-spouse beneficiaries, be withdrawn and taxes paid within 10 years. Basically, leave money in an IRA to anybody but your spouse and they have 10 years to withdraw the money.

3. Qualified Charitable Distributions (QCDs) may now be taxed. Previously, once you were over 70 ½ you could distribute from an IRA directly to a charity to meet your RMD requirement and not increase your income (adjusted gross income for IRS purposes). Those gifts may now be partly taxable.

4. Allows penalty-free withdrawals for birth or adoption. Note, the distribution is still taxable just no penalty (the penalty that applies if you are under 59 1/2).

5. Annuities can now be purchased inside active 401k accounts (don’t do it!).

Like almost all changes in the law, with planning the negative impacts of these changes can be minimized. Join us for one of our SECURE ACT presentations this year (August 5th) for more information about the SECURE ACT and how you can plan for the changes.