The Setting Every Community Up for Retirement Enhancement (SECURE) Act is a new retirement bill. Here are some key points to know about how the SECURE Act may impact your savings plans and business with Western Fraternal Life.
1. How does the law affect Required Minimum Distributions (RMDs)?
If you turn 70½ in 2020, you can now wait until age 72 to begin taking RMDs from your Individual Retirement Accounts (IRAs) and Qualified Deferred Fixed Annuity contracts.
2. What is the impact to contribution rules for traditional IRAs?
If you are working, the new law removes the age cap for setting aside savings into a traditional Individual Retirement Account (IRA). Beginning in 2020, anyone working who has earned income, can contribute to a traditional IRA, regardless of age (formerly the age cap was 70½).
3. How will the changes to inherited (IRA) distributions impact my retirement planning?
If you inherited an IRA from the original contract owner who passed away prior to January 1, 2020, you can continue your current distribution schedule. However, for situations where the original IRA account owner passes away after December 31, 2019, you will want to discuss the settlement options that are now available based on your personal situation. Some of the settlement options available to you may have changed.
4. How will the new law affect distributions upon the birth or adoption of a child?
Upon the birth or adoption of a child, the law permits an individual to take a “qualified birth or adoption distribution” of up to $5,000 from an IRA. This distribution will not be subject to the early withdrawal penalty.
These changes are effective starting with tax year 2020 contributions, made for the year 2020. We encourage you to contact your Western Agent or the Home Office to see how you can boost your retirement savings.
Western does not provide legal or tax advice. The information herein is general and educational in nature and should not be considered as legal or tax advice.
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