The SECURE Act is now in place –

With Senate’s passing and President Trump’s signing, certain key law changes MAY IMPACT YOU RETIREMENT starting January 1, 2020.

SECURE is an acronym for Setting Every Community Up For Retirement Enhancement.  This is the biggest change to retirement legislation in 13 years.  Those nearing retirement or in their earlier retirement years need to be aware of some of the most significant changes.

If your advisor has not scheduled a review with you, I suggest you do so soon OR, as always, you have the option to set a complimentary review with me.

Let’s cover some of the key changes:

  1. Required Minimum Distributions (RMD’S) – If you were 70-1/2 or older before 1/1/2020, things remain the same.  If you turn 70-1/2 in 2020 or later, the RMD age pushes out to 72 for most situations.  Strategic planning on when to start using retirement funds should be a key part of your tax and financial plan. There may be additional opportunity for Roth IRA conversions in our current lower tax rate environment AND may make sense for estate planning.
  2.  Increased Savings Opportunities Open Up – If you are working beyone 70-1/2 in year 2020 or beyond, you WILL BE ABLE to contribute to an IRA (up to $7,000 per person) and benefit from the tax deduction.  This is a great opportunity to offset taxable social security.
  3. New laws will make it easier and less expensive for small business owners to set up retirement plans for employees.  Even part time employees may have benefits.  We probably won’t see much on this front until 2021 when rules are clarified and laws and enrollment are in place.  There will be tax credit inceentives to the employer and additional incentive to offer auto enrollment.
  4. You may see annuity options added to 401k’s.  The SECURE Act is encouraging employers to add lifetime income options to their employees.
  5.  The SECURE Act eliminated the so-called “stretch” IRA provisions.  This is a big deal for beneficiary/estate planning.  Although many beneficiaries did not take advantage of it, they could take minimum distributions from an inherited IRA based on their own life expectancy.  Now most beneficiaries will now have only 10 years after the death of the owner to distribute the entire balance.  This includes inherited Roth IRA accounts.  NOTE: Surviving spouses, minor children, disabled beneficiaries and those that are not more than 10 years younger than the deceased have speccial exemptions from this rule.  AGAIN, strategic tax planning should be included in withdrawal decision.
  6.  With these changes, trust documents should be reviewed.  Many trusts build in a “pass through” feature to allow beneficiaries to stretch out the inherited accounts.  The language should be reviewed to make sure it still aligns with your intended goals.  In fact, this is a great time to have ANY will or trust reviewed as laws and your wishes may have changed since it was established.
  7.  The SECURE Act also allows penalty-free withdrawals of $5,000 from 401(k) or IRA accounts to pay for the cost of having or adopting a child.

This is our interpretation of the new laws and each person’s situation will determine how these laws will impact you.  As further developments arise, we will keep you informed.

Investment advisory services offered through Brookstone Capital Management, LLC (BCM), a registered
investment advisor. BCM and Merlak Tax Advisory Group, Inc./Carla Merlak are independent of each other. Insurance
products and services are not offered through BCM but are offered and sold through individually
licensed and appointed agents.