What Does the SECURE Act Mean For Me?

With the passage of the Setting Every Community Up for Retirement Act, there are some changes to IRAs and other retirement programs that you should be aware of.

Notable Changes

Required Minimum Distributions — The age at which someone would have to take RMDs for traditional IRAs and certain other types of retirement plans increased to 72. This change is effective for distributions required in 2020 and later years.

End of the Stretch IRA — A stretch IRA allowed a non-spouse who inherited an IRA to choose to have the distributions spread out over their lifetime. This is no longer an option in most cases. The beneficiaries now have only 10 years to deplete all the assets from their inherited IRA. There are a few exceptions to this, including spouses, disabled individuals, minor children until they turn 18, and individuals not more than 10 years younger than the account owner.

Elimination of the Age Limit on IRA Contributions — Taxpayers with earned income can make traditional IRA contributions at any age, not just for the years before reaching 70 and-a-half.

Adoption and Birth Expenses — The birth or adoption of a child is now considered a “distribution event.” Parents can now withdraw up to $5,000 from their retirement accounts without incurring the 10% penalty. These amounts may be repaid.

Student Contributions — Certain stipends, fellowships, and similar payments to graduate and postdoctoral students will be treated as earned income for IRA contribution purposes.

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