As part of the Government Spending Bill signed by President Trump signed on December 20, 2019, the Secure Act has also been passed.
Here are some of the Secure Act’s key changes I think you should note:
- Individual investors will be able to continue to contribute to traditional IRAs after age 70 ½ if they have working income in the year that the contribution is made.
- Retirees won’t have to take required minimum distributions until age 72. Through 2019 the threshold is 70 ½ but for retirees that don’t turn 70 ½ in 2019 they can delay their RMD until the year that they turn 72.
- The stretch IRA is going away. Before this act, non-spousal beneficiaries of an IRA could withdraw monies over their whole lifetime according to the Uniform Lifetime table. Under the new law these beneficiaries will have to draw down the account– and pay taxes on their withdrawals–over 10 years instead of over their lifetimes. This may severely increase the taxes for these beneficiaries and the net amount received from inheritances.
- Provisions could encourage employers to include annuities in their retirement plans.
The first provision could be helpful for those that are still working past age 70.5 as they can defer taxes by making contributions.
#2 and #3 are the ones that I would like to talk to you more about in our meetings for 2020. The implications for your heirs could be dramatic and there are strategies available which can help.
This material is for informational purposes only. It represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. It should not be considered investment advice, nor does it constitute a recommendation to take a particular course of action. Please consult with a financial professional regarding your personal situation prior to making any financial related decisions. LPL Financial does not offer tax or legal advice.
Jordan Kerner
Financial Advisor, Waddell & Reed, Inc.
Office: 475-619-2240 | Cell: 917-301-7274 | Fax: 203-557-6262
www.jordankerner.wrfa.com | jkerner@wradvisors.com
495 Post Rd E Ste 209| Westport, CT 06880