After being stuck in the Senate for over 6 months (thanks, as usual, Ted Cruz!), the Setting Every Citizen Up for Retirement Security, aka the SECURE act, was finally signed into law at the end of 2019.
What does it mean for you?
Here is a very quick summary with bonus snarky commentary:
The Required Minimum Distribution has been moved back from age 70 ½ to 72. Finally, we don’t have to know our half-birthday! Does this 18-month reprieve really address the additional longevity current retires face? Or the fact that as we age, we may forget to do follow these arcane IRS rules subjecting the elderly to 50% tax penalties? Not really, but that’s for another blog. Entitled, “RMD: Why I Think It is Lame.”
529 accounts can be used to pay down student loans. This is limited to $10,000 and, duh, why wasn’t that allowed all along?
A bunch of provisions allowing and incenting smaller employers to offer retirement plans. Plus making it easier for part-time workers to participate. Yay! Really. No snarkiness meant there.
Allowing annuities to be sold within 401(k) plans. Pro: Allows employees to turn fluctuating asset pools into guaranteed lifetime income. Con: Potentially high expenses in the annuities and shady sales tactics now finding their way into retirement plans. I reserve judgement on this until we see how it will work and be regulated.
Inherited IRAs need to be depleted within 10 years by non-spouse inheritors. This could upend many retirees’ estate plans and retirement income withdrawal tactics. It might encourage wider use of Qualified Charitable Contributions (fingers crossed) and lifetime family gifts. Lots to discuss here in a future blog when we know more about the provision.