The Secure Act

Scan Alert Image.jpg  By Thomas Rueger, J.D., CFP ®

The Secure Act (Setting Everyone Up for Retirement Enhancement) was passed on December 19, 2019 and became effective on January 1, 2020. The Act includes a number of reforms, some of which could make it easier for many Americans to save for retirement. Following are some of the changes that will have the most impact.

  • Elimination of the age limit for making Traditional IRA contributions – You can contribute to your Traditional IRA past age 70½ as long as you are still working. This is more aligned with the rules for 401(k) plans, 403(b) plans, and Roth IRAs.
  • Raising the starting age (from 70½) for RMDs – If you turn 70½ in (or after) the calendar year 2020 the new age at which RMDs must start is age 72 (with the actual deadline of April 1st of the following year). The Act made no change to the age at which Qualified Charitable Deductions (QCDs) may begin. You can still make QCDs from accounts once you reach the actual age of 70½.
  • Expanded plan eligibility for longer term part-time workers – Part-time workers that have worked more than 500 hours a year for 3 consecutive years must be allowed to participate in their employers 401(k) plan (if the employer maintains one).
  • Elimination of the “Stretch” IRA – For IRAs inherited from original owners that passed away on or after January 1, 2020, the Act requires beneficiaries to withdraw assets from an inherited IRA or 401(k) plan within 10 years following the death of the account holder. Exceptions to the 10 year rule include assets left to a surviving spouse, a minor child, a disabled or chronically beneficiary, and beneficiaries who are less than 10 years younger than the original IRA account owner or participant.
  • Penalty free withdrawals for birth or adoption expenses – You can take a “Qualified birth or adoption distribution” of up to $5K (per parent) from a 401(k) or an IRA without penalty.
  • Expanded tax free distributions from 529 college savings plans – If there is money left in a college savings plan after a student graduates, the family can use those funds to repay up to $10K in student debt over the course of the student’s lifetime for the account beneficiary or the sibling of the beneficiary.

For additional information or questions on how these tax changes might affect your specific situation please do not hesitate to contact your Relationship Manager.


The facts and opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendation for any individual. Where applicable, all data and information has been gathered from sources believed to be accurate such as the internet, nonaffiliated 3rd parties, news articles and professional subscriptions but this information is not warranted to be correct, complete or true. Vantage Financial Partners Limited, Inc. and its agents are not tax advisors or accountants. We strongly encourage you review your tax situation, opportunities and liabilities with your tax advisor before making any changes. This article is not intended as tax advice.



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