The Trusted Advisor

A Refresh on the SECURE Act

Posted by Susan Redsicker on Dec 21, 2020 12:42:00 PM

You may have heard that several points related to the SECURE Act of 2019 have been clarified. As your community-based financial advisors, we wanted to take a moment to bring you some of the most important pieces of the Act for your reference.

As a reminder, the SECURE, “Setting Every Community Up for Retirement Act of 2019” Act was enacted on December 20, 2019. The following clarifications were made in 2020:

• Contribution age now has no limits as long as eligible compensation.

• New exception to the 10% additional tax for any qualified birth or adoption distribution up to $5000 from applicable retirement plan if made within 1 year.  The distribution     may be recontributed to applicable retirement plan in which individual is a beneficiary.

•Qualified Charitable Distributions were not affected, they remain at age 70 ½.

•Beneficiary Stretch provision changes:

Elimination of lifetime stretch provision for non-spouse beneficiaries of inherited IRAs and other retirement accounts.

Eligible designated beneficiary must receive inherited accounts within 10 years of the account holder’s death except for excluded beneficiary exceptions of:

- Spouse

- Disabled

- Chronically Ill

- Minor Child (until reaches age of majority)

- Individuals not more than 10 years younger than the decedent (new option)

• Non-person beneficiary (charities/estates) were not changed by the stretch provision, remain at 5 year rule.

Your advisory team is monitoring additional tax guidance as it is provided by the IRS and will continue to send you periodic updates as needed.  If you have additional questions on the SECURE Act or what implications it has for you, please do not hesitate to reach out to your Wealth Advisor for more details. 

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The opinions expressed and material provided are for general information only.

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