The Secure Act & How It Impacts Your Retirement
The Setting Every Community Up for Retirement Enhancement (SECURE) Act, which passed on December 20, 2019, brought the greatest expansion to employer retirement plan law since 2006 when Congress allowed auto-enrollment and target-date funds. It also brought about several important changes for retirement savers.
Effective January 1, 2020, the maximum age limit for making Traditional IRA contributions was eliminated. Previously, individuals could not make additional contributions in the year he or she turned 70 ½ or later.
In addition, the age at which qualified retirement account holders must take Required Minimum Distributions (RMDs) was raised from age 70 ½ to 72, giving savers more time to take advantage of tax-deferrals.* However, since the law didn't take effect until January 1 of 2020, if you turned 70 1/2 in 2019, your initial RMD will still be due April 1 of this year. For all subsequent years, the deadline for taking RMDs remains December 31.
For more detail on how the SECURE Act may impact your retirement and estate planning, we encourage you to read this summary from LPL Financial. Of course, reach out to your advisor with any questions about how the new law may affect you and your retirement future.