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SECURE Act Facts


If you’ve got retirement on your mind, you’re probably aware of the Setting Every Community Up for Retirement Enhancement (SECURE) Act, which became law in late 2019. This law is very important for current and future retirees to understand, as it could change your current retirement plan. Here are just some of the important facts you should know about the SECURE Act: 

Withdrawal Changes 

One of the biggest changes that’s been made is to required minimum distributions (RMDs). The RMD age has been changed from 70 ½ to 72, which means you now have an additional 18 months before you have to begin making taxed withdrawals. Penalty-free withdrawals of up to $5,000 are also now permitted for 401(k)s.1  

While there are many positive aspects of the act, withdrawals on inherited IRAs have become more complicated. “Stretch” IRAs have been eliminated, and those inheriting an IRA now have only 10 years to withdraw all the money in the account, rather than the rest of their life as before. This mean you will have to begin paying taxes on the money much sooner. 1  

Contribution Changes 

Because of the RMD age change, you will now have more time to grow your retirement accounts. You can also continue to contribute to your traditional IRA at any age as long as you are still earning income. 529 accounts have been made more flexible to allow for repayment on qualified student loans, which will hopefully have a positive impact on student debt. The act also takes away some of the risks associated with annuities and makes them more accessible for 401(k) plan sponsors to offer to participants.2   

New Benefits for Small Business Owners  

Another benefit of the SECURE Act is the assistance offered to small business owners and employees. Employers can now automatically enroll employees in “safe harbor” retirement plans with a 15% cap, and part-time employees who work either 1,000 hours each year or have worked three consecutive years of 500 hours are now eligible to enroll in a 401(k) plan. A minimum tax credit of $500 has also been made available for employers who create a 401(k) or SIMPLE IRA plan with automatic enrollment.  

While it may take some time to truly see the impact the SECURE Act will have, it’s never too early to prepare. We are here to help you understand the specific impact the changes could have on your finances and retirement plan. Our financial services are designed to assist you in every step of your journey and take the burden off of you. The first step is education., Tthe next step is putting a plan in place. Let’s discuss what the SECURE Act could mean for you today! 

  1. https://www.investopedia.com/what-is-secure-act-how-affect-retirement-4692743 
  1. https://www.kiplinger.com/slideshow/retirement/T037-S001-cheapest-u-s-cities-for-early-retirement-2019/index.html 
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