In January of this year, the rules governing retirement accounts changed significantly. As a result of the passing of The Secure Act, there are long-term changes you might wish to consider to your financial and estate plan.

Stretch IRAs will be abolished going forward. Most of our clients who inherited an IRA on or before December 31, 2019 were able to stretch the distributions over their life expectancy. This was the “Stretch IRA.” For our clients who are inheriting retirement accounts after December 31, 2019, this opportunity to use the “Stretch IRA” will no longer exist.

For traditional IRAs and Roth IRAs there will be a new ten (10) year rule. Most beneficiaries will not be required to take any distributions during the first nine (9) years. However, whatever amount left in the account must be emptied by the end of the tenth year. (There are, of course, exceptions.)

Required minimum distributions now begin at age 72. Under the old law, owners of traditional IRAs who reached age 70 ½ were required to initiate Required Minimum Distributions (RMDs) based on the balance as of the prior year-end balance. Under the new law, if our clients reach the age of 70 ½ after December 31, 2019, they will not have to make any RMDs until they reach age 72.

Making IRA Contributions After 70 ½. Under the old law, clients who reach 70 ½ could no longer make contributions to traditional IRA accounts. (They could make contributions to Roth accounts, however.). Clients who have earned income can now continue to make contributions to traditional IRA accounts even after those individuals have reached 70 ½ years of age.

In light of the major changes in the landscape of retirement accounts, you should consider reviewing and revising your financial estate planning.