The benefits of prudent retirement planning are numerous, and the time you invest in planning will likely be well worth it. Here are three top benefits for those who put a plan in place:
- A higher income in retirement
- A lower tax bill in retirement (and in the years leading up to retirement)
- A less stressful life
New SECURE Act – How It Might Impact You
The SECURE Act of 2019 was passed by Congress in the waning days of 2019 and is now law, effective as of Jan. 1, 2020. The legislation contains 29 provisions and changes that affect both individuals and business owners. SECURE is a lumbering acronym that stands for “Setting Every Community Up for Retirement Enhancement Act of 2019.” (Clearly the acronym came first, then someone shoe-horned in the description.)
Here are several of the most impactful changes for individuals:
- The age for mandatory Required Minimum Distributions (RMDs) from retirement accounts has been increased to age 72 from age 70 ½ for those who will be turning 70 ½ during 2020 and later.
- The maximum age for contributing to an Individual Retirement Account (IRA), which used to be 70 ½, has been eliminated for individuals who still have earned income.
- The Stretch IRA has been eliminated. Now, individuals who inherit an IRA must distribute the IRA assets (and pay tax on them) within 10 years of the original account owner’s death. There are some exceptions, including surviving spouses, chronically ill heirs, disabled heirs and minors.
- 529 education savings plans get a boost under the new law, as it expands the definition of what types of things can be paid for with a qualified 529 distribution. You can now use 529 funds for homeschooling as well as private elementary, secondary and religious schools. They can also be used to pay up to $10,000 of student loans.
There are many other changes in this new law that are relevant to both individuals and business owners. Here is a link to a summary of the legislation:
Want an assessment of your readiness for retirement? Just give us a call or send an email. We’ll be happy to have a look at your situation.
Peter Thoms, CFA
Jeff Rotherham, CFP®