The New SECURE Act Helps People Save More for Retirement
January 28, 2020 by Kevin Nuss
The new SECURE Act helps make it easier for people to save more for retirement. While you don’t need to be an expert in it, learning about its key features can help you take advantage of it. Here are some highlights.
Required minimum distributions (RMDs) from traditional IRAs, SEP accounts, and 401(k)s are now not mandatory until age 72. Previously, they began the year you turned 70.5. RMDs count as taxable income. With the later starting date, retirees can have all their retirement-account money grow tax-deferred a bit longer. People who turned 70.5 in 2019 or earlier are not eligible.
If you have earned income, you can now make IRA contributions past age 70.5—even if you’re 72 or older and already taking RMDs.
The so-called “stretch IRA” is mostly dead. A young beneficiary used to be able to stretch out IRA distributions and taxes for decades. Now, most beneficiaries must fully liquidate the account within 10 years of the original account holder’s date of death. “Eligible beneficiaries” are exempt: the account holder’s spouse, heirs who are disabled or chronically ill, and heirs who are within 10 years of the age of the decedent can still stretch out distributions
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