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SECURE Act Makes Sweeping Changes for Retirees and Small Businesses

The SECURE Act (Setting Every Community Up for Retirement Enhancement Act) became effective January 1, 2020, ushering in significant changes to retirement account rules.  Here are some of the more impactful changes as we see it:

Increased RMD (Required Minimum Distribution) Age

In the past, Required minimum distributions (RMDs) began in the year in which an IRA or 401(k) owner turned 70 ½. The new law extends the starting age to 72. This affects those turning 70 ½ after December 31, 2019. For example, someone turning 70 ½ in 2020 who was planning to take their RMD this year can now delay until the year they turn 72.

Allowable IRA Contributions after 70 ½

Under previous law, a person could not make IRA contributions after age 70 ½. This gives working seniors (you must have earned income) the ability to make IRA contributions, and potentially help with tax savings.  

Elimination of the “Stretch” IRA

There is now a 10-year limit on distributions on inherited IRAs for non-spouse beneficiaries. The previous rules allowed these withdrawals to be taken over the beneficiary’s lifetime (aka: “Stretch”), but now the beneficiary’s portion must be withdrawn (and taxed) after ten years.

Benefits for small business 401(k)’s

There are also a number changes benefiting small businesses and their retirement plans including allowing multiple small employers to pool their 401(k) plans and more flexibility to make safe harbor changes during the year.

Click here for 10 SECURE Act changes and here for a detailed description of the changes. There are caveats and exceptions to most of these rule changes so be sure to contact us with any questions so we can apply them to your specific situation.


Disclosure: Securities and Advisory services offered through LPL Financial, a registered investment advisor. Member FINRA / SIPC. Contributions to a traditional IRA may be tax deductible in the contribution year, with current income tax due at withdrawal. Withdrawals prior to age 59 ½ may result in a 10% IRS penalty tax in addition to current income tax.

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