By Monika Tober, legal assistant

At the beginning of 2020, a dynamic change in retirement law passed: the SECURE Act, which stands for Setting Every Community Up for Retirement Enhancement Act.  This plan includes the following important and major changes: 

1. Required Minimum Distributions will start at age 72, not age 70 ½. This new law raises the age of required minimum distribution (RMD) to age 72. This means that if you started taking your distributions before 2020, you must keep taking your distribution. If you have already turned 71 ½ or are turning 70 ½ this year, you do not have to take the required minimum distribution (RMD) until you turn 72. Please see the chart below for reference:

Birth Date          Age     2020    2021   2022   2023

On or before June 30, 1949      70 ½      Y      Y     Y     Y

July 1, 1949 – Dec. 31, 1949     72           N         Y         Y        Y

Jan. 1, 1950 – Dec. 31, 1950     72           N         N         Y        Y

Jan. 1, 1951 – Dec. 31, 1951     72           N         N         N        Y

2. The Stretch IRA option and Inherited Retirement Accounts Are Eliminated. According to David Kudla’s article on“Upon death of an IRA account owner, distributions to non-spouse individual beneficiaries must now be made within 10 years. The current rules that allowed a non-spouse IRA beneficiary to ‘stretch’ required minimum distributions (RMDs) from an inherited account over their own lifetime (and potentially allow the funds to grow tax-free for decades) has been eliminated. The rule applies to inherited funds in a 401(k) account or other defined contribution plan as well.” There are, of course, exceptions. See Kudla’s article for more details.

Senior couple reviews paperwork

3. The maximum age regarding supplementing your traditional IRA will be invalidated or removed. Starting in 2020, if you are over 70 ½ and have U.S. income earnings, you may qualify to add to your traditional IRA. 

4. There are Changes to 529 Plans. If you are a parent, please take the time to explore this option available to you when you have student loans – this also applies to qualified apprenticeships.

5. There are Changes to Business Retirement Plans and Tax Credits. This new provision allows for the maximum credit for startup plans to increase to $5,000 from $500.  There is also a new credit of $500 for small employers whose workforce participates in their employers’ retirement plans. 

This is an easier way to both save for retirement and to obtain a retirement plan. Please see or any of the preferred finance sites on the internet – for more personalized and tailored information, please contact your financial advisor and/or CPA.

For more information on the latest updates in retirement law, contact Andersen Law PC at 720-922-3880.

Source: Stacy Heath


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