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The Secure Act (Setting Every Community Up for Retirement Enhancement) was signed into law on Friday, December 20 2019. Below please find some of the more important highlights of the new law. TD Ameritrade is working on accommodating the new rules with systems and internal process updates as they become effective January 1, 2020.
RMDs Will Start age Age 72, not 70 ½ — Starting Jan. 1, 2020, the new law pushes the age at which you need to start withdrawing money from your traditional IRA retirement accounts to age 72 from age 70 ½. If you turn 70 ½ in 2019, you will still need to take your RMD for 2019, no later than April 1 of 2020. If you are currently receiving RMD's (or should be) because you are over age 70 ½, you must continue to take RMD's. Only those who turn 70 ½ in 2020 (or later), may wait until age 72 to being taking required distributions.
You Can Contribute to Your Traditional IRA After Age 70 ½ — Beginning in your 2020 tax year, the law will allow you to contribute to your traditional IRA in the year you turn 70 ½ and beyond, provided you have earned income. You still may not make 2019 (prior year) traditional IRA contributions if you are over 70 ½.
Inherited Retirement Accounts — Upon death of the account owner, distributions to individual beneficiaries must be made within 10 years. Luckily, all Bene IRA owners pre 2020 are grandfathered into the previous rules regarding distributions and may maintain taking distributions based on your lifetime expectancy. Any individuals who become owners of Bene IRA’s 2020 and beyond must follow the new laws set forth by the Secure Act.
There are exceptions for spouses, disabled individuals, and individuals not more than 10 years younger than account owner. Minor children who are beneficiaries of IRA accounts also have a special exception to the 10 year rule, but only until they reach the age of majority.
Adoption/Birth Expenses — Allows penalty-free withdrawals from retirement plans for birth or adoption expenses up to certain limits.
If you have any questions about how this may affect you please phone our officeto schedule an appointment. Once TD Ameritrade completes their updates to the system we will be reaching out to you sometime during the 1st Quarter.