Six Quick Facts About the SECURE Act and Your Retirement Savings

The Setting Every Community Up for Retirement Enhancement (SECURE) Act was recently passed by Congress as part of the year-end budget resolution. It has some important implications that merit substantial discussion, which I will cover in future podcasts and articles. This list is not a complete list of all the provisions, but does touch on the most common ones I expect to have discussions about with clients.  

• If you are under 70 1/2 years of age at the end of 2019, you do NOT have to take required minimum distributions (RMD’s) from qualified retirement accounts until age 72.

• There is NO maximum age for contributing to IRA accounts. As long as you continue to earn income, you can now contribute through your entire life to your IRA.

• If you are a long-term part-time employee, your employer will be required to offer eligibility into the company 401(k) if you complete 500 or more hours of service a year for three consecutive years.

• Upon the birth or adoption of a child, you may take a distribution of up to $5,000 from a qualified retirement account without paying the premature distribution penalty. HOWEVER, you are still subject to income taxes – this is definitely something to talk with your financial adviser about. Penalty-free DOES NOT MEAN tax free!

• Non-spousal distributions from IRA accounts must be completed by the 10th year after the death of the account owner. The proverbial “stretch IRA” – the practice of listing children and grandchildren as beneficiaries to shelter wealth from taxes for as long as possible – is dead. This rule takes effect January 1, so on a morbid note, if the account owner dies prior to the end of 2019, the old rule applies.

• Starting in 2021, safe harbor rules affecting fiduciary responsibility will change; these changes will likely result in more annuity-structured products appearing as investment options in your employee retirement account. I will be writing and blogging extensively about this topic separately – these products have a storied history of high fees and underperformance. Moreover the change in safe harbor rules have some big gaps in responsibility that can leave employees and even potentially employers on the hook should things go poorly. 

Want to discuss how these changes may impact your personal situation? Schedule a free consultation and let’s talk about whether you should be concerned and what to do about it.