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The SECURE Act – Major Changes to Retirement Planning

The SECURE Act (which stands for Setting Every Community Up for Retirement Enhancement) went into effect yesterday – January 1, 2020.

For estate planning purposes, the most significant change is the elimination of the “stretch” provisions in favor of a 10-year rule.  Instead of being able to stretch required mandatory distributions (“RMDs”) over a beneficiary’s lifetime – in some instances over many decades – most beneficiaries will have to withdraw the entire balance of an inherited retirement account within ten years of the account owner’s death. The shorter ten-year period accelerates income tax due, possibly bumping beneficiaries into a higher income tax bracket.

There are a few exceptions to the new mandatory ten-year withdrawal rule: spouses, beneficiaries who are not more than ten years younger than the account owner, the account owner’s children who have not reached the “age of majority,” disabled individuals, and chronically ill individuals. Analysis of your estate planning goals and planning for your intended beneficiaries’ circumstances are imperative to ensure your wishes are accomplished.  There are a variety of estate planning techniques that can be used to mitigate the Act’s potential effect.

Other key provisions of the SECURE Act include raising the age at which someone must take RMDs to 72 and allowing people who work past 70.5 to continue to contribute to an IRA.

For most Americans, a retirement account is the largest asset they will own when they pass away. Given the new law, it’s important to make sure your estate plan still meets your wishes.  Additionally, with the changes to the laws surrounding retirement accounts, now is a great time to review and confirm your retirement account, including beneficiary and contingent beneficiary, information.

Contact The Estate Planner, LLC  today to schedule an appointment (314-303-3218) to discuss how your estate plan and retirement accounts might be impacted by the SECURE Act.

The choice of a lawyer is an important one and should not be made on the basis of advertisements.  Information in this blog is not meant to provide legal advice but is for informational purposes only.




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