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The SECURE Act and what you need to know

The SECURE Act and what you need to know

| January 24, 2020

Happy New Year!  We hope that this edition of “Notes” finds you well and that you are pleasantly surprised that 2020—from an investment perspective—has picked up right where 2019 left off.  As of this writing, equity markets are up, the consumer is happy, and most investors, us included, are optimistic about the current investment climate.

On the political front, 2020 has also picked up right where 2019 left off.  Trade, foreign affairs, impeachment and elections still dominate the headlines, although as of late these issues have not had the same impact on market volatility as they had just a few short months ago.  In spite of the difficult political climate, and in the midst of the aforementioned attention-grabbing headlines, an important piece of bi-partisan legislation was recently signed into law.  This legislation is designed to positively impact most retirement accounts held by individuals across the US. 

In early January, President Trump signed the SECURE Act into law.  SECURE is an acronym for Setting Every Community Up for Retirement Enhancement.  This was a bi-partisan bill designed to focus on the wide-spread concern that millions of Americans are not ready for retirement.  And it just might be the last bi-partisan legislation that comes out of Congress for some time.

So, what is in the SECURE Act, and more importantly, how will it impact your retirement accounts?  Here are a few highlights of the act. 

  • You now wait until you are 72 to start required minimum distributions (RMDs), as long as you hadn’t started them before January 1st.
  • Working retirees can continue to make contributions to their IRAs.
  • The non-spousal stretch IRAs have been eliminated, with some exceptions. Spouses continue to benefit from the stretch feature.
  • Penalty-free distributions have been expanded by a few additional qualifications.
  • Small company retirement plans are made more attractive to both employers and employees with tax credits, additional “safe harbor” and portability options, and multi-employer plans (MEPs).
  • Part time workers are now provided opportunities to participate in retirement plans.

The SECURE Act has also made it possible to pay off student debt with tax-free distributions from a 529 plan, and if you’re interested in an apprenticeship program, that can be paid from a 529 plan as well.

And that is just the tip of the iceberg.  We thought it could be extremely useful for all our readers to have the opportunity to speak with an expert in the subject matter.  So, mark your calendars for February 20th and plan to attend our SECURE Act workshop, featuring Brian Dobbis, Director of Retirement Solutions for Lord Abbett.  Brian is a featured speaker at retirement planning conferences around the US and will be here to help us navigate the SECURE Act and answer all our questions.  Look for an email in the very near future with additional details.

If you have any immediate questions or concerns, or want to reserve your spot for the workshop, don’t hesitate to reach out.