Welcome To The Biggest Change To The U.S Retirement System Since 2006
Happy New Year. Happy New Decade. And yes, welcome to a change in the U.S. Retirement system that will affect anyone who has a retirement account. It might be a happy change for some, but not for others.
On January 1, 2020, the recently passed Setting Every Community Up for Retirement Enhancement (SECURE) Act went into effect. And it will affect everyone who has a retirement account. There are multiple changes that could affect account holders immediately, and for this reason you may want to schedule a meeting with your financial advisor.
For example, the SECURE Act increases the Required Minimum Distribution (RMD) age to 72 from 70 ½ and applies to anyone who turns 70 ½ in 2020 or later. Also, if you don’t need income from your retirement plan or IRA accounts, the SECURE Act enables you to defer taxes from those accounts. That means that if you want to work beyond the traditional retirement age, the later RMD age provides more time for retirement income planning.
The SECURE Act also affects anyone inheriting an IRA or retirement account. For example, prior to the SECURE act, beneficiaries who inherited retirement accounts could take the RMDs over their lifetime. That is no longer the case for most non-spouse beneficiaries who inherit their retirement account on or after January 2, 2020. Now, most non-spouse beneficiaries must take the account proceeds and pay the corresponding taxes within 10 years of inheriting the account. This does not apply to beneficiaries who are disabled, chronically ill or of a certain age.
These are just a few of the changes. As I mentioned, there are many changes that you’ll want to know about. Let’s meet and discuss how these changes may affect your retirement planning. Give us a call today.