The SECURE Act & Your Financial Plan

The SECURE Act Could Potentially Have Positive Impacts on Numerous Aspects of your Financial plan

The Law that was signed into law right before the new decade began, the SECURE Act, holds the potential for a variety of positive effects on the financial wellbeing of Americans from almost every age demographic. For those already in retirement or of that age, the law changed rules for retirement accounts, including the age Required Minimum Distributions begin. It moved up to age 72 for anyone born after June 30, 1949- but the law also made contributing to a traditional IRA untethered from any age requirement. (Note- Rules for RMDs may have been more recently affected by the Coronavirus crisis.) Other than RMDs, a significant reason for a retiree to check their financial plan following the SECURE Act’s passage revolves around the “Stretch-IRA.” If your estate plan was designed with a “stretch” in mind, the law capped the elasticity of this strategy with a limit of 10 years whereas before it had been limitless… which it still is for EDBs (eligible designated beneficiaries) as they are exempt. Surviving spouses, minor children (but not grandchildren), and disabled individuals are included on this list.

For the younger crowd, the real positive impact stemming from this newly passed law deals with penalty-free early distributions. If the money is used for the birth (or adoption) of a child, or to payoff student loans, there is no penalty from the IRS for taking the distribution before the age of 59½. Although members of this generation might have to review their financial plan because it can no longer lean on a “Stretch-IRA” from their grandparents, the real reason to do so is to determine the best ways these new tools could be used to optimize your savings and retirement strategy. Paying off student loans earlier than anticipated, or having an extra thousand in cash upon the birth of a child, can transform a financial plan for the better through providing more opportunities for retirement income, savings, and investment choices. Set up a time to talk with a financial planner today.

The newest FEDLIFE Podcast episode will be part 2 of Dan Sipe and Ed Zurndorfer discussing the SECURE Act and what it means for both Federal employees, and American citizens in general. You can listen to part 1 here, on YouTube, or Spotify!

Check out Ed’s in-depth analysis of the SECURE Act in the FEDZONE.

Until Next Time,

**Written by Benjamin Derge, Financial Planner. The information has been obtained from sources considered reliable but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Benjamin Derge and not necessarily those of RJFS or Raymond James. Links are being provided for information purposes only. Expressions of opinion are as of this date and are subject to change without notice. Raymond James is not affiliated with and does not endorse, authorize, or sponsor any of the listed websites or their respective sponsors. Raymond James is not affiliated with and does not endorse the opinions or services of Edward A. Zurndorfer or EZ Accounting and Financial Services