A Quick Guide to the SECURE Act

When it comes to preparation for retirement, an overwhelming number of American do not feel secure in their assets. Approximately only one in five Americans believe they have enough for retirement. This means that almost 50% of Americans have little or no confidence in their retirement savings. 


The Role of the SECURE Act


The House of Representatives passed the Setting Every Community Up for Retirement Enhancement Act (SECURE) in May, 2019. The purpose of this act was to increase retirement savings. The Act then stalled in the Senate, which makes the future of this body of legislation uncertain. 


If passed, the SECURE Act will represent the first significant piece of legislation since the Pension Protection Act of 2006 that would have an impact on individuals preparing for retirement. 


The Act raises the age for required minimum distributions. Currently, people who save for retirement and use traditional IRAs are required to start taking required minimum distributions from their retirement account the age of 70 ½. 


The SECURE Act, however, pushes the age at which required minimum distributions must be taken to 72. As a result of increasing this age requirement, individuals would be granted another year and a half to enjoy tax-deferred growth of IRA investments. 


The SECURE Act also repeals the age restriction for contributing to traditional IRAs. Currently, there is no age limit on making Roth IRA Contributions. The SECURE Act, however, allows individuals to make contributions to both traditional and Roth IRAs regardless of a person’s age. 


In another vital change, the SECURE Act also eliminate stretch IRAs. At the moment, non-spouse beneficiaries who inherit IRAs are able to stretch the required minimum distribution from an inherited IRA account throughout their lifetime. Stretching an IRA in this way provides the opportunity to grow an IRA. 


Under the terms of the SECURE Act, however, non-spouse IRA beneficiaries would be required to withdraw all funds from their retirement account within 10 years of the IRA owner’s death.


The Effect of the SECURE Act


The additional time provided by the SECURE Act would be substantial for IRA owners. Many people with IRAs begin taking required minimum distributions at 70 and ½ because they are required to do so by law. Data collected from the Employee Benefit Research Institute reveals that individuals who own traditional IRAs and who are 70 ½ or older are the primary withdrawers of IRAs. 


As a result, the SECURE Act represents an acknowledgment that Americans are currently living and working longer and as a result the Act attempts to provide Americans with more time to accumulate a greater savings. 


Speak with an Experienced Estate Planning Lawyer


Rather than dramatically change the law, the SECURE Act represents a legislative effort to make it easier for IRA owners to grow traditional IRAs over their life. This is just one of a number of “new” obstacles and potential concerns that can arise about estate planning. 

If you or a loved one needs the assistance of an experienced estate planning lawyer to help navigate this process, you should not hesitate to speak with an experienced attorney at Ettinger Estate Planning today.

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