The “Setting Every Community Up for Retirement Enhancement Act of 2019” (SECURE Act) was passed in the House of Representatives on May 23rd, 2019. The bill was received by the Senate on June 3rd, 2019, however, it has stalled thus far and has yet to be brought up for a vote.
The SECURE Act, if passed and signed into law, has the potential to make some significant changes to the average consumers’ retirement plans. Some of the key proposed changes include:
- Removal of IRA Contribution Age Limitation – today, you cannot contribute to a traditional IRA when you’re over the age of 70 ½. The SECURE Act would remove this cap, as such, allow you to contribute to a traditional IRA at any age.
- Limitations on Tax-Advantages of ‘Stretch IRAs’ – today when IRA accounts are inherited by non-spouse beneficiaries, the taxable withdrawals from these accounts can typically be “stretched” over the beneficiary’s lifetime – extending the deferred tax benefit of the IRA over many generations. Proposed changes to this estate planning strategy could require non-spouses who inherit IRA assets to be fully withdraw those assets from the inherited IRA within 10 years of the original account holders passing.
- Increase Required Minimum Distribution (RMD) Age – today the law requires most individuals to take out Required Minimum Distributions from their retirement accounts after you reach the age of 70 ½. The proposed changes in the SECURE Act would push back the RMD age to 72 (some politicians have even called for extending the age to 75).
Not only are the above major changes on the table, but many more potential changes to consumer’s retirement lives are proposed within the 125+ page SECURE Act. While Sterling cannot predict when or even if these changes will occur, this is certainly news from Washington we are paying close attention to.
For a comprehensive review of your personal situation, always consult with a tax or legal advisor. Neither Cetera Advisor Networks LLC nor any of its representatives may give legal or tax advice.