Will the SECURE ACT make you more financially secure?
Buried in the massive continuing resolution funding the federal government, was The Secure Act, a bill designed to encourage people to save for retirement.
There were good points to the bill:
People over age 70 ½, who are still working, may continue to contribute to an IRA (this was already the case with some employer sponsored plans).
The age for required minimum distributions was raised from 70 ½ to age 72.
Expands multi-employer retirement plans so small businesses can band together and share economies of scale and administrative costs, hopefully encouraging more small employers to offer plans. The bill also increases tax credits for employers whose plans involve auto-enrollment. This has been an excellent way get employees to save for retirement.
All of the above are good things.
Now for the bad news:
Up until the end of 2019, a person who inherited an IRA had the option of taking the required minimum distribution based on their own life expectancy, sometimes stretching those withdrawals over decades. Beginning in 2020, inherited IRAs must be completely distributed in 10 years. This could be particularly costly for someone in their prime earning years, who also inherits a large IRA. The assets withdrawn will very likely be taxed at a high rate. Some experts believe that his law will make Roth IRAs an attractive alternative, because of the tax -free withdrawal feature.
Most of us will likely be affected one way or another by this legislation, so we encourage you to do some research, and contact us and your tax expert to discuss if you need to adjust any strategies. This applies whether you’re an employer, employee, or individual as the decisions you make could have long lasting effects on you, and even your heirs.
SC Parker is one of Buffalo’s longest tenured independent investment firms. Our professionals are here to assist clients in achieving their financial goals. We would be happy to perform a complimentary review of your unique circumstances and provide a customized financial retirement plan to fit your needs.
Located centrally on Main Street in Williamsville, we can be reached at (716) 632 – 6800 or through our website, www.scparker.com.