The Setting Every Community Up for Retirement Enhancement Act (or Secure Act) went into effect in December of 2019, affecting how people here in Raleigh can invest in retirement accounts. These changes in how people fund retirement also affect their estate plans, since retirement savings are part of a person’s assets.
Here are four of the changes that the SECURE Act brings:
- When one can withdraw as a beneficiary: The age for required minimum distribution used to be 70 ½ if you turned that age in or before 2019. Now, if you turned 70 ½ in 2020 or afterward, you can wait until age 72 before having to take out funds.
- Inheritance rules for IRAs: The funds in an inherited IRA need to be distributed within 10 years of the originator’s death. However, there are exceptions to this part of the act. Spouses, underage children, and others are exempt. This is perhaps the part of the act that has the most impact on inheritances.
- Easier for small businesses to provide retirement: With the SECURE Act, small businesses are better able to provide retirement funds, such as 401(k) for their employees. This can be a game-changer for many people who wouldn’t otherwise have a retirement investment account as an asset to their estate.
- IRA investment limitations removed: Before the SECURE Act, people couldn’t invest in IRA accounts after they turned 70 1/2. With the act, that limit has been removed, allowing people to continue to invest in these retirement accounts.
With the SECURE Act, many people’s retirement investment plans are being adjusted. As the name implies, the Act was designed to help people accrue more wealth for retirement. This higher retirement funding translates to more funds in a person’s estate, making revisions to estate plans essential. Contact Thornton Law Firm to help you revise your estate plan today.