The Setting Every Community Up for Retirement Enhancement Act of 2019, better known as the SECURE Act, was passed in December of 2019. Most provisions in the law go into effect on January 1, 2020.
Key takeaways—The SECURE Act:
• Repeals the maximum age for traditional IRA contributions.
• Increases the required minimum distribution (RMD) age for retirement accounts to 72.
• Some Inherited IRA distributions must now be taken within 10 years
• Allows long-term, part-time workers to participate in 401(k) plans.
• Permits parents to withdraw up to $5,000 from retirement accounts penalty-free within a year of birth or adoption for qualified expenses.
• Allows parents to withdraw up to $10,000 from 529 plans to repay student loans.
I will discuss the first three items below:
IRA Contributions can be made past the age of 70 1/2
• Under the act, you can continue to contribute to your traditional IRA past age 70½ if you are still working. That means the rules for traditional IRAs will align more closely with 401(k) plans and Roth IRAs.
Required minimum distributions (RMDs) now begin at age 72
• RMDs now begin at age 72 for individuals who turn 70½ in the calendar year 2020 or later.
• Until further guidance is issued, those who turned age 70½ in 2019 should generally continue to take RMDs.
Some Inherited IRA distributions must now be taken within 10 years
• IRAs inherited from original owners who have passed away on or after January 1, 2020 many beneficiaries are required to withdraw assets from an inherited IRA or 401(k) plan within 10 years following the death of the account holder.
• Exceptions to the 10-year rule include assets left to a surviving spouse, a minor child, a disabled or chronically ill beneficiary, and beneficiaries who are less than 10 years younger than the original IRA owner or 401(k) participant.
Fidelity has a well written article on the SECURE Act at: https://www.fidelity.com/learning-center/personal-finance/retirement/understanding-the-secure-act-and-retirement