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Posted on February 14, 2020 in Firm News
In December of 2019, a new tax law referred to as the SECURE Act was signed into law. This law makes significant changes to the timing for required distributions from a retirement account. Under former law, a person was required to take a minimum distribution from their retirement account when they reached age 70 ½. The age for taking your Required Minimum Distribution (RMD) has now been raised to age 72. If you are turning 70 ½ in 2020, you now have until you are 72 to begin taking your RMD. The law increases the age for contributions to an IRA to age 72 as well. These changes are expected to address the fact that people are living and working longer. The Act also changes the way a non-spouse must handle an inherited retirement account. If you inherit a retirement plan from someone other than your spouse, you used to be able to take distributions that stretched out over your expected life span. Non – spouse beneficiaries of retirement plans must now take all of the money out of the account within ten years. This change is expected to impact many beneficiaries in their 40’s and 50’s who are actively working and fall into higher tax brackets at the time of the mandatory distributions by increasing their tax liability.
The new law affects accounts and Taxpayers beginning in 2020. If you are already 70 1/2, your distribution requirements will not change. If you are currently a non – spouse beneficiary of a retirement account and are taking your RMD as scheduled under the old law, you are not affected by the change. If you have questions regarding retirement accounts or the distributions you are taking, please reach out to us at Ken R. Ashworth & Associates so that we may discuss retirement planning under the new law.