2020 has already brought a lot of changes, and they’ve got me thinking, so I wanted to share a few of my thoughts on the new Secure Act that was signed into law at the end of 2019 and went into effect on 1-1-2020.
This new law has some very simple things that most have heard about like the RMD now doesn’t have to be taken until the age of 72 if the person turns 72 after 1-1-2020. If someone turned 70 ½ before 2020 then they will fall under the old rules.
The new act gives someone an extra 18 months to accumulate before they must take out the RMD. Another thing that has happened was that now people can continue to contribute past the age of 72 (when the RMD is required) if they have an earned income.
(I am not a tax person so, please, contact your tax preparer for advice on what qualifies as earned income.)
Annuity Marketing Manager
The stretch IRA: The new rule says that if someone inherits a qualified account and the beneficiary is not a spouse then they have to with spend down the money within 10 years. Some will take a lump sum, some may choose to take payments monthly or annually for 10 years or they would even choose to take the money as late as the last day of the 10th year. The bottom line is that the government requires that taxes are paid on the account by the end of the 10th year. Depending on the amount and a beneficiary’s situation it can be distributed in many ways.
There are some new rules on 401k’s. The IRS hasn’t had time to lay everything out on their site yet so there will be much more information in the coming months.
I will be sure to keep everyone updated as things start to be released.
This act is good in my opinion because it is also going to let annuities become part of the planning for people’s future. Some annuities can provide a lifetime income. Most fixed annuities that I talk to folks about are safe and have the power of zero, so they don’t take a hit if the market goes down.
This is also good because it can help people save for retirement because people are working longer and living longer.
If you would like to talk more about the Secure Act or Annuities, please contact me and I can give more info and help answer more specific questions about the Secure Act or annuities.