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Emily Ramseyer
April 5, 2021

SECURE ACT UPDATES

The Setting Every Community Up for Retirement Enhancement Act, known as the SECURE Act (“Act”), was signed into law by former President Trump. This Act made changes to laws governing retirement plans aimed at increasing access to tax-advantaged accounts and preventing older Americans from outliving their assets.

 The following are a few of the key changes from the Act:

 1.     There is no longer an age limit for contributing to an IRA. Prior to this Act, traditional IRA contributions were not allowed once the individual attained age 70.

 2.     Required Minimum Distributions (“RMDs”) now start at age 72 rather than age 70½. Prior to this Act, retirement plan participants and IRA owners were generally required to begin taking RMDs from their plan by April 1 of the year following the year they reached age 70.

 3.      There is partial elimination of stretch IRAs. Prior to this Act, both spousal and non-spousal IRA beneficiaries were generally allowed to stretch out the tax-deferral advantages of the plan or IRA by taking distributions over a beneficiary’s life/expectancy. This Act amends the RMD provisions to generally require that payout be completed within10 years of the IRA owner’s death; exceptions may exist with the following types of beneficiaries: 1) surviving spouses, 2) minor children, 3) disabled individuals, 4) chronically ill individuals, and 5) individuals not more than10 years younger than the IRS owner (i.e. siblings).

 While these are only a few of the changes, if you would like to learn more about how this Act may affect your estate plan, or to maximize any benefit for your beneficiaries, contact us.

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