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McClellan Legal LLC Estate Planning & Tax Assessment Blog

Friday, September 27, 2019

Retirement Accounts and the SECURE Act

Earlier this summer, the United States House of Representatives passed The Setting Every Community Up for Retirement Enhancement (SECURE) Act almost unanimously. However, the Senate has not made the decision to pass this bill yet. The SECURE Act, if passed as it is currently written, may lead you to reconsider your retirement planning.

One of the most important ways the SECURE Act may help you is by altering the forced withdrawal age from 70.5 to 72 years old. This means that you can wait an extra year and a half before taking out any money from your retirement accounts. This difference will be beneficial for those who would rather have their money stay in the account so it may continue to grow tax deferred.

Additionally, the SECURE Act removes age limits on the contributions for traditional IRAs. Currently, no one can contribute to a traditional IRA past 70.5 years old. Once this bill is passed, however, you may contribute to this account at any age, similar to a Roth IRA. However, while there are certainly some benefits to the SECURE Act, there are also some pitfalls.

The negative impact of the SECURE Act that is limiting the stretching of the required minimum distributions (RMDs) for your non-spouse beneficiaries, such as your children or grandchildren. Stretching the RMD is a common practice in estate planning, as it allows your beneficiaries to spread out the distributions throughout their lifetime. Under the SECURE Act, this practice will not be allowed. If the beneficiary is over 21, then the IRA would have to be distributed within 10 years of the account owner’s death. Of course, there are exceptions. If the beneficiary is ill or disabled, then they may stretch the required minimum distributions. Furthermore, if the beneficiary is a minor, this decade-long clock will not start until the child reached the age of 21.

Of course, nothing is set in stone yet. The Senate may still make changes to the SECURE Act before passing it, or the bill may not be passed at all. We will keep you informed on the progress of the SECURE Act. If you would like to discuss your current retirement planning, please call us at 610-444-5552. We will be more than happy to schedule a free initial meeting with you to review the ways estate planning can help.


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McClellan Legal LLC is located in Kennett Square and serves clients throughout the areas of Avondale, Chadds Ford, Coatesville, Downingtown, Landenberg, Oxford, Phoenixville, Pottstown, West Chester, & West Grove.



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