SECURE Act of 2019 effective 1-1-2020

Sweeping legislative tax or retirement reforms typically happen only once every decade or so, but the final weeks of 2019 brought the second major piece of legislation in the past 24 months, as the SECURE Act was signed into law on December 20, 2019. Its provisions go into effect on January 1, 2020.

The three most notable provisions affecting most investors are:

1) the increase in the age of RMDs (required minimum distributions) from retirement plans from age 70 ½ to age 72,

2) the elimination of the IRA contribution restriction at age 70, and 

3) the elimination of the ability for a non-spouse beneficiary to withdraw retirement funds over his or her lifetime.  All funds from an inherited IRA must now be distributed to non-spouse beneficiaries within 10 years of the IRA owner’s death (this rule applies to inherited funds in a 401(k) account or other defined contribution plan, too).  There are some exceptions to this rule, though.  Distributions over the life expectancy of a non-spouse beneficiary are allowed if the beneficiary is a minor child of the deceased account owner (until the child reaches the age of majority), a disabled or chronically-ill individual, or a beneficiary who is no more than 10 years younger than the deceased account owner.  Please click on the following link for a summary of the Act: