Congress Set to Pass the SECURE Act — The Impact on Your Retirement Plans
You might have discussed the changes that the SECURE Act (Setting Every Community Up for Retirement Enhancement Act) with your retirement planer back in the summer when it passed the House by a vote of 417-3. However, the Act seemed to be derailed after passing the House so you and your retirement planner may have put any changes to your retirement plan on the back burner.
TAKE NOTE – You may need to put those plans back on the front burner. It appears that the SECURE Act is expected to pass Congress as part of the bipartisan appropriations bill aimed at avoiding another government shutdown. Provided that President Trump signs the bill, which is expected, the SECURE Act will become law as of January 1, 2020.
What does this mean for your retirement plans? Let’s take a look at a few of the pros and cons of the SECURE Act that you might need to discuss further with your financial planner.
Benefits of the SECURE Act
- It makes it easier for annuities to be included in 401(k) plans, which allows better access to additional sources of retirement income for many individuals.
- Individuals working past 70.5 years of age can now contribute to their IRAs, which matches the contribution rules for Roth IRAs and 401(k) plans.
- For individuals who turn 70.5 after 2019, the start date for RMDs will now be 72 years of age instead of 70.5 years of age.
Disadvantages of the SECURE Act
- Removal of the RMD (required minimum distribution) provisions for stretch IRAs as a tax revenue generator for the federal government. This provision of the Act can create problems for pass-through trusts that are used to stretch out the distributions from IRAs for beneficiaries. The Act could result in massive tax bills for some beneficiaries by requiring the beneficiary to take all RMDs by the end of the tenth year following the death of the account owner.
- Decreasing or removing some fiduciary requirements for insurance companies and products that may be included in a 401(k) plan. This provision could pose some potential risks for individuals.
What Should You Do Right Now?
Contact your financial planner to discuss changes to your retirement plans, estate plans, and trusts to take advantage of the benefits of the SECURE Act. You may also need to make immediate changes to avoid any negative consequences that could result from the changes in the tax laws that result from the provisions of the SECURE Act.
As with any change in the laws related to retirement plans and the tax code, it is important to review your estate plan and retirement plan with an experienced financial planner. Even a small change in tax laws could have a significant impact on your current plans. If you do nothing, you could stand to lose a substantial amount of money or your family members could incur large tax debts after your death. It is best to review your plans now and make changes as soon as possible.
The Castle Wealth Group Can Help
The financial professionals of The Castle Wealth Group are constantly monitoring changes in the tax laws and other laws related to estate planning and retirement planning. Our financial professionals can explain these changes and how these changes impact your current plans. We can quickly modify your estate plans and retirement plans to reflect the changes in the law to ensure that you, your family, and your assets are protected now and in the future.
If you have questions, call (844) 885-4200 to speak with a knowledgeable representative.
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