Retirement Planning Update

Wednesday Morning
01.01.2020

With all the discussion of impeachment, trade deals and Brexit, it may have been easy to miss new legislation that will affect savers and retirement accounts alike. Donald Trump signed the Secure Act which implements the broadest set of changes to retirement accounts in the last 13 years. The breadth of change is extensive and we will continually gather information. 

Updates and Changes: 

  • Required Minimum distributions: The RMD age beginning in 2020 will change from 70.5 to 72. Also, the RMD mortality tables have been updated to reflect slightly longer life spans. The new law will also allow Roth conversions to the new RMD age of 72. 

  • Tax Deductible IRA: The law also increases the age at which people may still contribute to tax-deductible IRAs. As more people work into their 70’s and 80’s they will be able to contribute to an IRA and receive the deduction. 

  • Small Business: The law will allow more Multi Employer Plans, allowing small businesses to ban together to create inexpensive retirement solutions. This is already being done successfully with organizations like the American Bar Association and many medical associations. This law does not become effective until 2021. The law now opens the door for part-time employees to participate in retirement plans. If you work at least 500 hours per year for 3 years and are 21, you would be eligible for an employer retirement plan. 

  • Trusts, Beneficiaries, and Stretch IRAs: The Secure Act eliminated stretch IRA provisions for Beneficiaries more than 10 years younger than the age of the deceased. Spouses and minor children are generally exempt from this law. The new rules in effect seek to distribute the Inherited IRA, IRA Trust, 401K, etc., over a 10-year period. It no longer allows a beneficiary to stretch the RMDs over his or her life span. 

Past performance does not guarantee or is indicative of future results.  This summary of statistics, price, and quotes has been obtained from sources believed to be reliable but is not necessarily complete and cannot be guaranteed.  All securities may lose value, may not be insured by any federal agency and are subject to availability and price changes.  Market risk is a consideration if sold prior to maturity. Information and opinions herein are for general informational use only and subject to change without notice.  This material does not constitute an offer to sell, solicitation of an offer to buy, recommendation to buy, or representation as the suitability or appropriateness of any security, financial product or instrument, unless explicitly stated as such.  

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