A recent post from Jamie on his WealthAdviceMadeSimple blog regarding the SECURE Act.
Setting Every Community Up For Retirement Enhancement (SECURE) Act was recently signed into law by President Trump in December and offers a meaningful impact for retirement legislation. A more extensive overview of the law’s provisions can be found here, but for purposes of this post (and subsequent ones), I want to focus on a few key planning ideas that you can incorporate into your personal financial plan.
Let’s start with a simple one – the change to the age that Required Minimum Distributions must begin. If you were born on July 1, 1949 or later, your RMD age is now age 72 instead of the previous age 70 ½. That’s important for several reasons, none more important than the fact that your retirement account can continue compounding in a tax-deferred manner for an additional 18 months before the IRS requires you to begin taking income. If you turned 70 ½ before the end of 2019, you still must begin your RMD’s, even if you were delaying your first RMD until April 1, 2020.
Planning Idea: Consider using those extra tax years to convert more of your pre-tax IRA to a Roth IRA which has no future Required Minimum Distributions and removes future earnings from being taxable.
Notably, Qualified Charitable Distributions (QCD’s) are still permitted at age 70 ½ which is great news for several reasons..