Menu
Simpson Estate and Elder Law
  • Home
  • Our Services
  • Videos
  • Articles
  • Directions
  • Contact

417-256-1968

naela

Close Menu
December 26 2019

New Law Makes Big Changes to Retirement Plans

Marty Simpson Articles

President Trump has signed a spending bill that makes major changes to retirement plans. The new law is designed to provide more incentives to save for retirement, but it may require workers to rethink some of their planning. 

The Setting Every Community Up for Retirement Enhancement (SECURE) Act changes the law surrounding retirement plans in several ways:

  • Stretch IRAS. The biggest change eliminates “stretch” IRAs. Under current law, if you name anyone other than a spouse as the beneficiary of your IRA, the beneficiary can choose to take distributions over his or her lifetime and to pass what is left onto future generations (called the “stretch” option). The required minimum distributions are calculated based on the beneficiary’s life expectancy. This allows the money to grow tax-deferred over the course of the beneficiary’s life and to be passed on to his or her own beneficiaries. The SECURE Act requires beneficiaries of an IRA to withdraw all the money in the IRA within 10 years of the IRA holder’s death. In many cases, these withdrawals would take place during the beneficiary’s highest tax years, meaning that the elimination of the stretch IRA is effectively a tax increase on many Americans. This provision will apply to those who inherit IRAs starting on January 1, 2020.  
  • Required minimum distributions. Under prior law, you have to begin taking distributions from your IRAs beginning when you reach age 70 ½. Under the new law, individuals who are not 70 ½ at the end of 2019 can now wait until age 72 to begin taking distributions. 
  • Contributions. The new law allows workers to continue to contribute to an IRA after age 70 ½, which is the same as rules for 401(k)s and Roth IRAs.
  • Employers. The tax credit businesses get for starting a retirement plan is increased and the new law makes it easier for small businesses to join multiple-employer plans.
  • Annuities. The newly enacted legislation removes roadblocks that made employers wary of including annuities in 401(k) plans by eliminating some of the fiduciary requirements used to vet companies and products before they can be included in a plan.
  • Withdrawals. The new law allows an early withdrawal of up to $5,000 from a retirement account without a penalty in the event of the birth of a child or an adoption. Currently, there is a 10 percent penalty for early withdrawals in most circumstances. 

Given these changes, workers need to immediately reevaluate their estate plans. Some people have used stretch IRAs as an estate planning tool to pass assets to their children and grandchildren. One way of doing this has been to name a trust as the IRA’s beneficiary, and these trusts may have to be reformed to conform to the new rules. If a stretch IRA is part of your estate plan, consult with your attorney to determine if you need to make changes.

To read the legislation, click here.  For more on the new law, click here and here.

Medicare Premiums to Increase By Almost $10 a Month in 2020 Feds Release 2020 Guidelines Used to Protect the Spouses of Medicaid Applicants

Related Posts

Articles

5 Reasons for Seniors to Celebrate in 2023

Articles

Protecting Spouses of Medicaid Applicants: 2023 Guidelines

Articles

Does Medicare Cover the Cost of Getting a Second Opinion?

Recent Posts

  • 5 Reasons for Seniors to Celebrate in 2023
  • Protecting Spouses of Medicaid Applicants: 2023 Guidelines
  • Does Medicare Cover the Cost of Getting a Second Opinion?
  • What Is the Difference Between Medicaid and Medicare?
  • Does Medicare Pay for Assisted Living?

Archives

  • December 2022
  • October 2022
  • August 2022
  • May 2022
  • March 2022
  • February 2022
  • January 2022
  • November 2021
  • October 2021
  • July 2021
  • May 2021
  • February 2021
  • January 2021
  • December 2020
  • November 2020
  • October 2020
  • September 2020
  • August 2020
  • July 2020
  • June 2020
  • April 2020
  • March 2020
  • February 2020
  • January 2020
  • December 2019
  • November 2019
  • October 2019
  • January 2019
Back To Top

facebook

Contact

417-256-1968

844-273-2923 fax

Address

303 Aid Avenue
West Plains, MO 65775, USA

© Simpson Estate and Elder Law - A web solution by CHVentures     Login