The Setting Every Community Up for Retirement Enhancement Act, better known as the SECURE Act, was signed into law on Friday, December 20th.  This legislation had been discussed for most of the year and features some major changes for retirees, beneficiaries, and older workers.  TD Ameritrade has outlined the most important features of the bill, which we have included below:

  • RMDs Will Start age Age 72, not 70 ½- Starting Jan. 1, 2020, the new law pushes the age at which you need to start withdrawing money from your traditional IRA retirement accounts to age 72 from age 70 ½. If you turn 70 ½ in 2019, you will still need to take your RMD for 2019, no later than April 1 of 2020. If you are currently receiving RMD’s (or should be) because you are over age 70 ½, you must continue to take RMD’s. Only those who turn 70 ½ in 2020 (or later), may wait until age 72 to being taking required distributions.
  • You Can Contribute to Your Traditional IRA After Age 70 ½- Beginning in your 2020 tax year, the law will allow you to contribute to your traditional IRA in the year you turn 70 ½ and beyond, provided you have earned income. You still may not make 2019 (prior year) traditional IRA contributions if you are over 70 ½.
  • Inherited Retirement Accounts- Upon death of the account owner, distributions to individual beneficiaries must be made within 10 years. There are exceptions for spouses, disabled individuals, and individuals not more than 10 years younger than account owner. Minor children who are beneficiaries of IRA accounts also have a special exception to the 10 year rule, but only until they reach the age of majority.
  • Adoption/Birth expenses- Allows penalty-free withdrawals from retirement plans for birth or adoption expenses up to certain limits.