As many of you may know, Congress recently passed the “The Setting Every Community up for Retirement Enhancement Act of 2019” (SECURE Act). The Act was voted on in the Senate, with 71‐23 in favor, as part of an eight‐bill, $1.4 trillion spending package signed into law by President Trump on December 20, 2019. It had passed in the House of Representatives in May with a 417‐3 vote.
The SECURE Act became effective on January 1, 2020 and addresses retirement savings options, minimum required distributions, and 529 plan provisions to name a few.
We have attached a copy of the highlights of the law as produced by the House Committee on Ways and Means.
While there are a number of updates to the law that are addressed by the ACT, the main ones that we feel will affect you revolve around the increase in the required age for minimum withdrawals from IRAs (changed from 70 ½ to 72) and the elimination of the “stretch IRA”, and an estate planning method that allows IRA beneficiaries to stretch their distributions from their inherited account and the required income tax payments based on their life expectancy.
We view the increase in the minimum required distribution age to be a positive. In addition, the Act repeals the maximum age for traditional IRA contributions which recognizes that Americans are living longer and many continue to work past age 70 ½, the most recent maximum age for contributions.
On the negative side, the elimination of the Stretch IRA provisions in a traditional IRA and defined contribution plans like 401(k)s may require a change of estate planning strategy for many individuals with non‐spouse beneficiaries and large IRAs.
We will be evaluating the changes and how they pertain to you and plan to discuss any action items with you over the course of the year. In the interim, please do not hesitate to reach out with any questions. Thank you.