SECURE Act – What Advisors Need to Know

Attached to the year-end spending bill that will go into effect tomorrow, Jan. 1, 2020 is the Setting Every Community Up for Retirement Enhancement Act (SECURE Act).


Below is a summary of changes to be aware of:
Limiting Stretch IRA’s –
Instead of withdrawals from an inherited (non-spouse) IRA being stretched over the lifetime of the beneficiary, many will be required to take withdrawals within 10 years after the original account owner has passed away.


Annuity allocations in 401(k)s 
Rules surrounding liability concerns have been relaxed. This will allow plan sponsors to include more in-plan annuity options.


No IRA Contribution age limit
Like 401(k)s and Roth IRAs, contributions made to an IRA can now be made by those working past the age of 70.5.


RMDs at age 72 –
Account holders who have not reached the age of 70.5 by the end of 2019 may now begin taking RMDs at the age of 72.


Small employer retirement plans –
rules have simplified the process to run multi-employer retirement plans with the goal of expanding retirement plan offerings. Increased tax incentives for plan sponsors can help offset the cost of operating a plan.


Annual disclosure of lifetime income from defined contribution plans
How these will be calculated still needs fine-tuned, but this requirement will show plan participants how much income could be generated from their current lump sum balance.


Penalty-free distributions up to $5,000 from a qualified retirement account within a year of the birth or adoption of a child.


We understand that being prepared for the SECURE Act to go into effect is an important and timely topic that you will want to discuss with your clients. We recommend that you work with CPAs and estate planning attorneys who can help you determine the potential impact of this act on your clients.


If you have any questions, please feel free to contact our team at 866.363.9595.


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