The SECURE Act of 2019

{2 minutes to read}  Today, I want to talk about new retirement plan rules based upon the SECURE Act of 2019. SECURE stands for Setting Every Community Up for Retirement Enhancement and there are some major changes for qualified plans.

First, an individual who attains the age of 70 and a half by the end of the year would have to start taking Required Minimum Distributions (RMDs) from their IRA’s qualified plans. These distributions are taxable.

Since people are living longer, the SECURE Act has now changed the RMD age to 72, which allows people to defer those distributions for a longer period of time. This is especially relevant for people that don’t need to live off the income from their qualified plans.

And that brings me to the next and probably the most impactful part of the SECURE Act changes, which is the change in rules pertaining to stretch IRAs. In the past, when you would inherit an IRA, you could take it out based upon a small payout that would last your entire lifetime, thereby avoiding a large income tax on the lump sum.

Now, based upon the SECURE Act, people will have to take distributions to liquidate their accounts over a 10-year period. At the end of the 10 years, all the money will have been paid out to the decedent’s beneficiaries.

The reason I think that this is significant is that the loss of the stretch IRA provides people with a great planning opportunity. If they feel they really do not need the income and they are looking at these accounts as an asset that would be inherited by their children, there are some great insurance planning opportunities for taking the money out of the IRA and creating a much larger legacy than just the qualified plan.

What I’ve done is put together an attachment to this blog that contains:

• the prior laws,
• the new law under the SECURE Act, and
• the impact of the change to each individual.

If you have any questions regarding this type of retirement and estate planning, as always, give us a call or send us an email. That’s what we are here to do — provide value-added service and help you make good decisions about your money.

Registered Representative offering Securities through American Portfolios Financial Services, Inc. (APFS) Member FINRA/SIPC. Investment Advisory Services are offered through G&G Planning Concepts, Inc. which is not affiliated with APFS.  Strategic Wealth Advisors Network and Gassman Financial Group are not affiliated with APFS.

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