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The S.E.C.U.R.E. Act

Cool acronym. Who gets to come up with those? Probably some intern with too much time on their hands. It stands for Setting Every Community Up for Retirement Enhancement Act.

The intent is to incentivize people to save more for retirement but the Act also slips in some non-retirement tax law changes. For now, so that I don’t bore you too much, we’ll just talk about the retirement account changes.

Before the Act, you could only contribute to a traditional IRA up to age 70 ½. Now there is no age restriction on traditional IRA contributions as long as you’re working.

Did you know you can contribute to your traditional IRA for 2019 up until April 15th of 2020?

There is also a requirement with certain retirement accounts that we must take “Required Minimum Distributions” a.k.a. RMD’s - from those accounts starting at age 70 ½. Now the age to start taking RMD’s is age 72. Not a huge change but cheers to another year-and-a-half of your account growing!

The bad news comes to those of you lucky enough to inherit a retirement account. Before the Act, if you inherited a retirement account, you could stretch out the distributions over your IRS-defined life expectancy. But now, most beneficiaries must drain inherited accounts within 10 years after the account owner’s death. I say most because there are exceptions so let’s chat if this affects you.

For example: If your grandfather (I hope this does not happen) dies in 2020 or later, you can only keep the big Roth IRA that you inherited from him open for 10 years after his departure.

The congressional research service estimates this will generate about $15.7 billions dollars in tax revenue over the next 10 years. Yikes!

Of course there are exceptions to all of these rules, so let’s chat about your specific set of facts.

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