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Horizon Elder Law & Estate Planning Blog

Wednesday, January 8, 2020

Understanding the SECURE Act

The SECURE Act was part of the spending bill President Trump signed on December 20, 2019. Proponents have praised the Setting Every Community Up for Retirement Enhancement (SECURE) Act as giving individuals the ability to plan more effectively for their retirement. Contacting your California elder law attorney to discuss your current estate plan is advised because some of the provisions of the SECURE Act could impact your current estate and retirement plans.

Keep reading to learn more about five ways that the SECURE Act might affect your retirement and estate plan.

1. Removal of Stretch IRA Provisions

If you intended to leave money in an IRA for your heirs, you might want to change your estate plan. The SECURE Act removed the stretch IRA provisions that allowed many beneficiaries to stretch out distributions from inherited IRAs. Under the new law, most beneficiaries will be required to withdraw the funds from an inherited IRA within ten years after the death of the original account holder. This change could result in a significant tax liability for some beneficiaries. The provision will not apply to minors or beneficiaries with special needs or who are chronically ill.

2. Increases Age for RMDs

The SECURE Act changes the age that individuals are required to begin receiving required minimum distributions (RMDs) from their IRAs from 70 ½ to 72 years. The change applies to anyone turning 70 ½ years of age on or after January 1, 2020.

3. Removal of Age Restriction for IRA Contributions

The SECURE Act removes the age restriction for contributing to an IRA. Under the new law, anyone who receives earned income from working can continue to contribute to their IRA regardless of their age. This provision allows individuals to work longer and save more money for retirement.

4. Part-Time Employees May Qualify for Retirement Plans

The provisions of the SECURE Act expand access to retirement plans by allowing many part-time employees to now qualify for employer-based retirement plans. The plan also makes it easier for many small businesses to offer employer-based retirement plans to help expand retirement plans to additional employees who might not have had access to these plans before the legislation.

5. Annuities May Now Be Included in 401(k) Plans

The SECURE Act increases legal protection for employers who offer annuities as part of their 401(k) plan as an incentive for more employers to offer annuity options to employees. Annuities can create a guaranteed stream of income during retirement years. However, some opponents of this provision are concerned that employees might be led to purchase annuity contracts that they do not understand, do not need, or are not in their best interest.

Contact a California Elder Law Attorney to Review Your Estate and Retirement Plan

It is a good idea to review your estate and retirement plan periodically, but especially after a major change in laws that impact these plans. Contact the experienced elder law attorneys at Horizon Law today. At Horizon Law, we can review your plans in light of these recent changes in retirement laws to determine what changes you need to make to protect your best interests and the best interests of your loved ones.


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