The SECURE Act, recently signed into law by President Trump, is changing the rules of retirement in a significant way. We’ll be writing about some of the SECURE Act’s changes over the next several weeks. Yet for today’s article we will stick to some of the provisions that might impact you the soonest.
For years the age 70 ½ has been important for owners of qualified retirement accounts (generally IRA’s or 401k’s). This age was important because it signified the time when the plan owner would have to begin taking required minimum distributions (RMD’s) whether she liked it or not. To many plan owners this influx of cash was unwanted at best, and detrimental at worse.
Plan owners that were either still working, or were otherwise doing just fine without the RMD, suddenly found their savings being bled down and subjected to federal and state income taxes (which was the point of the RMD to begin with). Owners that wanted to pass their qualified plan down to their heirs suddenly became concerned whether there would be anything to leave behind.
Fortunately the SECURE Act recognizes that many persons are working past 65. Accordingly, the RMD age has been moved back a bit to age 72. While this may not be enough of a change for some folks, it’s still a move in the right direction. So if you are approaching age 70 ½ and you don’t want to pull money out of your qualified retirement account quite yet, you now have a bit more time.
In our next article we will look at the SECURE Act’s impact on inherited IRA’s and the related impact on estate planning.