Couto DeFranco would like to advise the community about the SECURE Act; it is a new law that, for some people pushes back the RMD (required minimum distribution) age to 72.

Before the SECURE (Setting Up Every Community for Retirement) Act, if you had money in a traditional Individual Retirement Accounts (IRA) or an employer-sponsored retirement plan and were retired, you were required by law to start making withdrawals after you attained age 70 ½. But for people who did not reach 70 ½ by the end of 2019, the SECURE Act pushes out the RMD start day for most situations until age 72. The SECURE Act gives you additional time to allow your IRAs and 401(k)s to grow without being depleted by distributions and taxes.

Removal of Traditional IRA Contribution Age Limit

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Currently, if you're age 70 1/2 or older, you can't make contributions to a traditional IRA. However, as of January 1, 2020, that restriction is no longer in place. There will no longer be age restrictions on making IRA contributions. So, it’s possible that you could be taking RMDs at some point and still able to put money into your traditional IRA if you have earned income. Whether it is deductible still will depend upon your modified adjusted gross income. An advisor from Couto DeFranco could help you determine deductibility in your case.

Note that the effective date will not change your ability for the 2019 tax year. If you’re hoping to make a previous year contribution for 2019 after the first of the new year, and you are above age 70 ½, that is not allowed. The change is only for 2020 contributions and years going forward.

Part-Time Workers Might Be Able to Access Retirement Benefits

The SECURE Act also expands access to certain employer-sponsored retirement plans. Starting with the 2021 plan year, employers are expected to offer retirement benefits to workers who have been with the company for at least three years, and who work 500 hours or more each year. Employers may not have to contribute for these employees, but will be required to allow employees to contribute for themselves.

Modification of Traditional IRA Required Minimum Distributions to Designated Beneficiaries

Under the SECURE Act, the entire IRA balance must be distributed to a designated beneficiary within 10 years of the death of the owner (who has died after December 31, 2019).  Certain exceptions are allowed for surviving spouses, minor children and disabled or chronically ill beneficiaries. Generally, in previous years, designated beneficiaries were allowed to spread the distributions over their own life expectancy from the time of the owners passing.

Start Planning Now

Many of these SECURE Act rule changes require proactive planning. So it is important to speak with a qualified professional about these tax law changes and your financial and retirement situation. If you have any questions call 973-378-3300 or email