On Friday December 20th, Congress passed the Setting Every Community Up for Retirement Enhancement (SECURE) Act as part of the larger spending bill. In effect, it makes several adjustments to how retirement works for almost every American. Here are the main things for you to know about the changes.

Required Minimum Distributions
The age to start taking out Required Minimum Distributions from 401k’s and traditional IRAs is being moved from 70.5 to 72 years old. This means members can now wait longer to start withdrawing assets. The maximum age to contribute to an IRA was also removed, meaning anyone with earned income can always continue to save. For people already over the age of 70.5 by the end of 2019, there will be no changes to their RMDs other than a slight adjustment to the computation on how much they must take out. Generally, the RMD amount will be slightly lower starting in 2021.

Inherited IRAs
Also known as “Stretch” IRAs- all retirement accounts that are inherited can no longer be used over the lifetime of the person inheriting the account. Instead, the account must be completely withdrawn within 10 years. This can add significant risk for couples that have all their retirement savings under the name of one spouse as it may increase the tax burden for the surviving spouse and reduce the amount they have to live on.

There are several other benefits that were added too, including ways to use retirement money to help pay for the birth or adoption of a child, more ways for small businesses to help employees save, the ability to use a 529 Plan to help pay for student loans, and more.

This change in law impacts all of us, and we’re happy to address any worries our members may have.