- The SECURE Act’s pushback for the start of RMDs to age 72 opens the Roth conversion wider.
- High taxes forced by the new ten-year distribution requirement can cut inherited tax-deferred IRA accounts in half.
- Setting up an accumulation trust as the beneficiary of a Roth account can create a tax-efficient trust that could last for generations.
The SECURE Act passed by Congress last week is the first significant retirement plan legislation since the Pension Protection Act of 2006. The SECURE Act changes a number of important things which have become a routine part of retirement planning going all the way back to ERISA in 1974, which first enacted qualified plans and IRAs. If you are on the cusp of retirement or recently retired, these new regulations, which go into effect in a matter of days, will have an impact on your retirement planning.
There is some good news in the new law. If you still have earned income, you will be able to continue contributing to your IRA after age 70-1/2, the old limit, for as long as you have qualifying income. 529 Plan benefits can be used to pay up to $10,000 of student loans and expenses for certain certificate and apprenticeship programs-retroactive to 1/1/19. You can withdraw $5,000 from a qualified plan without penalty before age 59-1/2 for the qualified birth or adoption of a child and repay it under easier rules than repaying loans from a plan. Part-time workers who work at least 500 hours annually for three years will be eligible for company plans-was 1,000 hours. And, company plans can now offer lifetime income annuity products that can be transferred to a new plan or IRA if the participant changes or leaves an employer without fees or penalties.
Beyond these and other tweaks, three changes could have a significant impact on your retirement plan….