Setting Every Community Up for Retirement Enhancement (SECURE) Act
The SECURE Act, signed into law on December 20, 2019, included a package of changes to the laws governing retirement plans and Individual Retirement Accounts (IRAs). This document highlights some of the changes that affect IRAs.
Please note that the IRA Disclosure Statement and endorsements included with your annuity contract do not yet reflect the changes in the law. We will notify you regarding the updated documents after they are amended to reflect the new rules.
IRA owners may be able to delay taking Required Minimum Distributions (RMDs) until they reach age 72.
Increases the age certain individuals are required to start taking RMDs from age 70½ to age 72:
- If you turn 70½ after December 31, 2019 the deadline for taking your first RMD from your traditional IRA is now April 1 of the year after the year you turn 72.
- If you turned 70½ prior to January 1, 2020 this rule change does not apply to you, and you must continue taking RMDs.
Non-spouse beneficiaries must fully withdraw the balance of Inherited IRAs within ten years.
Non-spouse beneficiaries who inherit IRAs (including traditional, Roth, SEP, and SIMPLE IRAs) from owners who die after December 31, 2019, must withdraw the entire IRA balance by the end of the tenth year after the IRA owner’s death. A spouse beneficiary has the option to stretch IRA distributions over their own life expectancy or withdraw the entire account balance by the end of the tenth year after the IRA owner’s death.
The age limitation for traditional IRA contributions has been repealed.
For taxable years 2020 and later, individuals of any age with earned income can contribute to traditional IRAs. If you are still working, you may be able to contribute to your traditional IRA for 2020 and subsequent years, even after you reach age 70½ (provided that you are otherwise eligible to make IRA contributions).
Penalty-free birth or adoption withdrawals.
Beginning January 1, 2020, you can take a penalty-free distribution, up to $5,000, from your IRA for the birth or adoption of a child. Such distributions must be made within one year from the date of the birth or adoption and can later be rolled back into an IRA. Special IRS reporting requirements apply.
Please speak with your tax and/or legal professional regarding questions you have regarding these rules and your particular situation.