The Secure Act

What you need to know about The Secure Act

On December 20, 2019, President Trump signed the Setting Every Community Up for Retirement Enhancement Act (SECURE Act). The SECURE Act, which is effective January 1, 2020. The Act is the most impactful legislation affecting retirement accounts in decades. The SECURE Act has several positive changes: It increases the required beginning date (RBD) for required minimum distributions (RMDs) from your individual retirement accounts from 70 ½ to 72 years of age, and it eliminates the age restriction for contributions to qualified retirement accounts. However, perhaps the most significant change will affect the beneficiaries of your retirement accounts: The SECURE Act requires most designated beneficiaries to withdraw the entire balance of an inherited retirement account within ten years of the account owner’s death.[1]

[1] If a beneficiary is not considered a designated beneficiary, distributions must be taken by the fifth year following the account owner’s death. Common examples of beneficiaries that are not designated beneficiaries are charities and estates. See Treas. Reg. § 1.401(a)(9)-3, Q&A (4)(a)(2) and 1.401(a)(9)-5, Q&A (5)(b).


While you are employed, there is no longer an age limit for contributions to your qualified retirement plans


The age you must begin taking required minimum distributions (RMDs) increased from 70 ½ to 72


If you are a permanent, part-time employee, you may be eligible to contribute to an employer-provided retirement plan


If you named a trust as the beneficiary of your retirement accounts, it might need updating because of these new rules


The way your beneficiaries will inherit your retirement accounts changed significantly. Under the old law, most beneficiaries could “stretch” their withdrawals from an inherited account over their lifetime. Under the new law, they will have to withdraw the entire account balance within ten years of your death unless they are:

• Your spouse
• Your minor child that hasn’t reached the “age of majority” in your state
• A disabled individual
• A chronically ill individual
• A person not more than 10 years younger than you

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