The new year brought new laws. One major piece of legislation that went into effect on January 1st is the Setting Every Community Up for Retirement Act, also referred to as the SECURE Act. With people living longer, more and more people are found in the difficult position of outliving their retirement savings. The SECURE Act was enacted in the hopes of curbing this problem. The measures put in place by this newly effective law may have a substantial impact on how people will plan for retirement.
Your Retirement Plan with the SECURE Act
In the past, retirees have been required to start taking Required Minimum Distributions (RMD) from their retirement accounts, such as a TSP or an IRA, when they turn 70.5 years of age. Under the SECURE Act, the starting age for taking RMDs is bumped up to 72. This means that people have an additional year and a half to keep all of the funds in their retirement accounts until they need to start taking distributions.
If you are unclear whether this new age cap applies to you, know that if you turned 70.5 in or before 2019, you will have already had to take your first RMD and are required to continue doing so. If you are not set to turn 70.5 until 2020 or later, then you are allowed to wait until you turn 72 before having to take any RMD.
Another major retirement planning change brought by the SECURE Act is the fact that it eliminated the age limit on making IRA contributions. Prior to the SECURE Act, there was a ban on making contributions to an IRA if you were over the age of 70.5. Now, no such restriction exists. Any wage earning individual can make IRA contributions regardless of age.
In addition to the above, the SECURE Act will open a major door for employees across the U.S. as far as retirement savings are concerned. Under the Act, more employers will be able to offer annuities as investment options within 401(K) plans. Annuities are great in the way that they provide guaranteed income over the lifetime of a retiree. If you are new to annuities, be sure to consult with a knowledgeable financial advisor. While there are benefits to annuities, it is still a complex investment account. Choosing the wrong annuity could damage your entire investment portfolio.
Estate Planning Attorney
While the SECURE Act is not predicted to have a major and immediate impact on those who are currently retired, it may have a significant impact on those who are planning for retirement. People are not saving for retirement like they should, especially considering people are living longer and remaining active well into their advanced years. This is something you should seriously consider.
If you are looking to most effectively manage your assets in order to preserve and pass on your wealth, the time is now to take steps to do so. At Unique Estate Law, we take into account things such as recent changes in the law to make sure that your estate plan continues to protect your best interests and that of your loved ones. Contact Unique Estate Law today.