Key Take-Aways from the Secure Act

You’ve likely heard or read about the recently passed SECURE act and CARES act. For many of our clients, two areas of these acts are most relevant:

Required Minimum Distributions (RMD): 

  • For 2020, RMDs from IRAs and retirement plans were waived. The waiver does not apply to benefits paid from defined benefit pension plans.
  • If you already took a 2020 distribution, you may roll it back in within 60 days.
  • If you reached the young age of 70 1/2 BEFORE the year 2020, you will be required to resume distributions in 2021.
  • Everyone younger than that cutoff may now wait until age 72 to begin distributions. There isn’t any action needed here, just an FYI.

Beneficiary RMD: 

  • Prior to the SECURE act, beneficiaries who inherited IRA and ROTH IRA accounts could “stretch” distributions over their IRS defined lifetime.
  • Under the new law, when an individual dies after 2019, almost every non-spouse beneficiary will be required to distribute the entire account within 10-years (naming your will, estate, or trust may still result in a 5-year distribution rule).
  • Surviving spouse beneficiaries are not subject to the 10 year rule and may roll over benefits to their own IRA.
  • The 2020 RMD waiver also applies to beneficiary distributions.

ACTION ITEM: During our next meetings let’s discuss if these new distribution rules will impact your goals and expectations for the money you leave behind and how we can plan after these changes.