On Friday, December 20, 2019 the President signed the SECURE Act (Setting Every Community Up for Retirement Enhancement) and it becomes effective on January 1, 2020. These rule changes may significantly impact the distribution of your retirement assets and the amount of income tax paid. As a result, estate plans and beneficiary designations may need to be modified to avoid unwanted consequences and to take advantage of new planning opportunities.
The major provisions of this law include the following:
• Increases the age required minimum distributions must be started from 70 ½ to 72.
• Repeals the maximum age for traditional IRA contributions.
• Creates a 10 year payout period on all IRAs and qualified plans unless paid to a surviving spouse. There are limited exceptions to this rule.
• Allows different types of assets to be held in a 401(k) that would provide a guaranteed income stream during retirement.
• Simplification of the 401(k) safe harbor rules
• Up to $10,000 can be used from 529 plans to pay student loan debt
• Up to $5,000 can be used from a retirement plan to pay for the costs of a child’s birth or adoption.
We will provide more details in the coming months. However, if you would like additional information or have reason to believe that these provisions may impact you in the immediate future please feel free to contact us at SDK.