Part of our job as estate planning attorneys is to make sure our client population is up to date on recent acts, amendments, and changes in case law that might affect their long-term planning. Importantly, the SECURE Act (“Setting Every Community Up for Retirement Enhancement”) is important to know about, as it affects the retirement and estate plans of Americans in any stage of their own planning processes.
What is the SECURE Act?
The SECURE Act is part of a major spending bill that was passed in 2019. The Act has several significant implications for those planning for retirement, and it is important for anyone engaged in long-term planning to understand its effects.
The SECURE Act’s Implications
First and foremost, the Act pushes back the age at which retirement plan participants need to take required minimums distributions from age 70½ to age 72. This essentially means that those wanting to take distributions from their IRA can wait until April 1, after the year they turn 72, to begin these required minimum distributions. Giving this cushion allows for a bit more flexibility that can end up being greatly beneficial for those wanting to use money from their IRA.
Next, the SECURE Act makes changes to an important law that allowed decedents’ beneficiaries to receive the assets to which they were entitled over a long period of time. By taking these payments gradually over a lifetime, beneficiaries could defer taxes on the money and end up receiving twice the amount of money than what they would have received via a lump sum.