Tranel Talks Column

Secure Act

The SECURE Act, or Setting Every Community Up for Retirement Enhancement Act, was passed into law on December 20, 2019 and took effect on January 1, 2020.

The aim of the SECURE Act was to prevent Americans over 70 years of age from outliving their assets, and to encourage contributions to retirement accounts for individuals, including part-time workers and small-business owners.

Jordan Bradford, Financial Advisor with the Tranel Financial Group, provides a thorough summary of the SECURE Act in the video below:

Video Transcription:

I just wanted to share with you a few quick points on the new SECURE Act which was just passed into law on December 20th of 2019 and just took effect on January 1, 2020.

Changes To The Required Minimum Distribution Age

A couple of the main points regarding the SECURE Act— probably the biggest one out there that everyone has heard of or a lot of people have heard of at this point —is that the change in the required minimum distribution age is going from 70.5 to 72 years of age. So the good news is, if you have not turned 70.5 yet but you were anticipating doing so in the next year or so, you get an extra year and a half to delay that.

One key point, though, is if you just turned 70.5 in 2019, I’m afraid that you do still have to take your required minimum distribution. Although you do still get until April 1st of this year to do so, so just keep that in mind.

But if you have not turned 70.5 yet, the biggest change from the SECURE Act is that we’re now going to 72 years of age. This allows your money to grow a little bit longer for you.

How The SECURE Act Impacts Small Businesses & Part-Time Employees

The second major change: it is now significantly easier for small businesses to pool their resources together and develop a 401K plan, or any sort of workplace retirement plan, with other companies that may or may not be in their area. The SECURE Act allows them to pool their resources together much, much easier.

Another big item from the SECURE Act is that part-time workers are now more eligible to participate. In the past, it was more challenging for a part-time worker to accrue the required number of hours to actually contribute to a workplace retirement plan and now those regulations are much easier for these part-time employees to be able to do that.

retirement chart going up

An Update To Stretch IRAs and Inherited IRAs

One of the last big changes is the stretch IRA provision. This is another big one and this can impact people in different ways. The main thing to know here is that if you are inheriting an IRA that is not from your spouse the IRS is now requiring, in almost all instances, that you deplete the money from that IRA within 10 years. Previously, you were eligible to take that distribution based on your age— as in the person inheriting the IRA —now you’re actually going to have to start taking withdrawals right away and finish those withdrawals within the 10 year span.

Again, that’s only if you are a non-spouse inheriting an IRA, but it is important to know as part of your estate planning needs, and as part of your financial planning future.

Those are the main big points to the SECURE Act. It did start, like I said, on January 1st, so if you have any questions at all, or need any advice related regarding any of this, please feel free to reach out to us, The Tranel Financial Group. You can contact us at (847) 680-9050. Thank you!