In the midst of all the impeachment news Congress and the White House have passed and signed a year-end government spending bill that has some significant changes for retirement savings. This legislation is named the SECURE Act (Setting Every Community Up for Retirement Enhancement), and there are a few changes worth noting.
Americans are living longer, and a couple changes are being made to reflect this trend. First, the age at which an IRA account holder must begin taking Required Minimum Distributions (RMDs) has been raised to 72 from 70.5. Second, given that Americans are often working longer in addition to living longer, the legislation proposes that the prohibition on contributions to an IRA after age 70.5 be repealed. You will now be able to continue to contribute to an IRA as long as you are working.
One proposed change to Inherited IRAs is expected to increase tax revenue for the IRS. Spousal IRA rollovers will continue to operate unaffected, but non-spousal Inherited IRAs must now be fully distributed by the end of the 10th calendar year following the original owner’s death.
Albeit at the margin, these changes will likely cause some investors to have to revisit their plan for drawing down assets in retirement.
Please call your advisor or a tax professional with any questions.
Lastly, we wish you and yours a wonderful holiday season and an abundant New Year!
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