Happy New Year!
Just before Christmas, Congress passed a spending bill, which the President signed into law. Attached to that bill was the SECURE Act, which is an acronym for “Setting Every Community Up for Retirement Enhancement.” It went into effect on January 1.
Here are three changes that we think you should know about:
Required Minimum Distributions (RMDs) – Yours might start later
If you turned 70 ½ in 2019, you will still need to take your RMD for 2019 no later than April 1, 2020. If you are currently receiving RMDs (or you should be) because you are over age 70 ½ then you must continue taking these RMDS.
Effective January 1, 2020 the age required to begin withdrawing money from a traditional IRA raised from age 70 ½ to age 72. So, if you turn 70 ½ in 2020 or later, you may wait until age 72 to begin taking required distributions.
Contributing to a Traditional IRA After Age 70½
Beginning in the 2020 tax year, the new law will allow you to contribute to your traditional IRA in the year you turn 70½ and beyond, provided you have earned income. You still may not make 2019 (prior year) traditional IRA contributions if you are over 70 ½.
Withdrawals from Non-Spousal Inherited Retirement Accounts
Upon the death of the account owner, distributions to individual beneficiaries must be made within 10 years. There are exceptions for spouses, disabled individuals, and individuals not more than 10 years younger than the account owner. Minor children who are beneficiaries of IRA accounts also have a special exception to the 10-year rule, but only until they reach the age of majority.