Much has been said about the SECURE Act and its ten-year limitation on trust distributions. But this isn't all that was affected. There are several other provisions that are relevant to estate planning and retirement that need not be forgotten.
Increased Age for Minimum Distributions
Before the SECURE Act, people were forced to begin taking the required minimum distributions from their retirement plans and individual retirement plans (IRAs) by no later than 70½, or else suffer penalties. The SECURE Act raises this age to 72. This reflects the desire for people to work longer and save more before retiring. Whether this year and a half will have any real meaningful impact on retirement accounts is yet to be seen. But it is dubious that this will turn the retirement planning community on its head.
Removal of the Maximum Age for Contributions
Before the SECURE Act, people were unable to continue to contribute to their IRAs after the age of 70½. The Act removes this ceiling. It allows workers of any age to continue to contribute to their IRAs. Unlike the increased age for minimum distributions, this may have a more meaningful impact for people who choose to retire later in life and continue working as there is no year and a half cap on the change.
Reduction in Barriers to 401(k) and 403(b)
Retirement plans for part time workers and small businesses are now easier to access as the SECURE Act removes certain barriers to multi-employer plans.
Birth and Adoption Costs Withdrawals
Before the SECURE Act, withdrawing funds from a retirement account to pay for the expenses of the birth of a child or for adoption suffered substantial penalties. The Act now permits withdrawals of up to $5,000.00 from certain retirement plan types to cover costs of birth or adoption.
There are certainly other things included in the SECURE Act that are relevant to estate planning and retirement. For example there are increased options to purchase annuities inside 401(k) plans, certain provisions to increase annuity options inside 401(k) plans, as well as an impact on the qualified charitable distributions and their affect on RMD offsets. But those are beyond the scope of this posting.
The SECURE Act makes a number of adjustments that may be relevant to your estate plan. Be sure to review your plan with an attorney to make sure your plan still meets your needs. If you have questions about the SECURE Act or need to see if it affects your estate plan, contact Signature Law for a free consultation.