In December 2019, President Trump signed the Setting Every Community Up for Retirement Enhancement (SECURE) Act. The legislation is one of the broadest pieces of retirement legislation in the past two decades, and could have a major effect on your retirement. For now, here’s an overview of what you need to know about the act – for more information that’s specific to you and your retirement, reach out to one of our retirement advisors at Harvest Financial Planning, LLC today.
What Does the Secure Act Do?
The SECURE Act contains a number of provisions related to retirement. Some of the most important ones that you should know include:
- Elimination of maximum age cap for retirement contributions. One of the most significant changes that the legislation makes is that of eliminating the maximum age cap for retirement contributions to traditional IRA (individual retirement accounts). Previously, those who worked beyond the traditional retirement age were barred from contributions past age 70 ½.
- Extension on required minimum distributions. Previously, retirement plan participants were required to start collecting the required minimum distribution (RMD) by April of the year following the year that they turned age 70 ½. Under the new act, however, RMDs must be collected by April 1 of the year following the year in which the participant turns 72.
- Penalty-free IRA withdrawals. Previously, withdrawing from an individual retirement plan prior to retirement age was possible, but would result in a penalty. Under the new law, individuals are able to make withdrawals of up to $5,000 penalty-free if used to defray the costs of having or adopting a child.
- Student loan repayments possible with 529 account assets. For those who have student loans, tax-advantaged 529 accounts (which are used to pay for education costs) can now be used to pay for up to $10,000 in student loans annually.
- Improved retirement planning enhancements. Another neat element of the SECURE Act is that under the act, 401(k) administrators are required to provide plan participants with “lifetime income disclosure statements” on an annual basis. Essentially, these statements will help participants know how much money they have, as well as how much they could have if the balance of the 401(k) was used to purchase an annuity. This will help participants better understand their financial situation and plan for retirement as such.
Learn More Today – Call Our Retirement Planning Professionals Now
If you have questions about the SECURE Act and how your retirement may be affected, don’t hesitate to reach out to our experienced professionals at Harvest Financial Planning, LLC. After we have a better understanding of your financial situation and current plan for retirement, we can provide you with more information about what provisions of the SECURE Act may be relevant for you, as well as provide you with informed financial planning advice. Call our professionals today or schedule a meeting online to get started.
This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this educational material.