In late December, the Setting Every Community Up for Retirement Enhancement (SECURE) Act was signed into law. As a result, now is an ideal time to revisit retirement and wealth distribution plans to ensure they are in alignment with the new rules, and explore the opportunities created by these changes to help you further establish your legacy. Because the SECURE Act also impacts trusts that are named beneficiaries, now is also an excellent time to reexamine your estate plan.

Below is our take on the most impactful changes of the SECURE Act:

  • Increases the required minimum distribution (RMD) age to 72 instead of age 70 ½ for those who did not reach age 70 ½ by December 31, 2019.
  • Eliminates the “stretch” or lifetime distribution provision for non-spouse beneficiaries of IRA and other retirement accounts and replaces it with a 10-year distribution period requirement.
  • Allows for a $5,000 penalty-free qualified birth or adoption distribution from IRA accounts, which can be repaid at a later date.
  • Eliminates the age limitation for deductible and non-deductible contributions to traditional IRA accounts to align with the rules for contributions to Roth IRA accounts.
  • Keeps the age at 70 ½ to make a Qualified Charitable Distribution (QCD).
  • Allows for distributions of up to $10,000 from a 529 plan account for qualified education loan repayments.

If you have any questions regarding the SECURE Act and how it will impact your situation, please reach out to us to schedule a conversation.

The new rules of the SECURE Act favor the utilization of Roth IRA conversions and charitable remainder trusts as tools to mitigate the negative impact of losing the stretch distribution provision for heirs.

NOTE: The information provided in this article is intended for clients of Carlson Capital Management. We recommend that individuals consult with a professional adviser familiar with their particular situation for advice concerning specific investment, accounting, tax, and legal matters before taking any action.