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The SECURE Act – And Why It Matters To You

This article briefly looks at the SECURE Act and what you should keep in mind as you plan for retirement.

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What Parts of the SECURE ACT Relate to Financial Planning?

The key provisions of the act that relate to personal financial planning are:

The maximum age for traditional IRA contributions was repealed. Originally, the maximum age was 70 ½.

The act permits parents to withdraw up to $5,000 from retirement accounts on a penalty-free basis within one year of birth or adoption for qualified expenses.

The act made it possible for long-term part-time workers to participate in 401(k) plans.

 “Stretch” inherited IRA strategies were all but eliminated.

The act raised the required minimum distribution (RMD) age from 70 ½, to 72.


The act allows parents to withdraw up to $10,000 from Section 529 College Savings Plans to repay student loans.


What Should I Do About Minimum Distributions?

For those who were already taking required minimum distributions in 2019 but did not turn 72 until 2020 or 2021, my advice is that you should continue taking those minimum distributions until the Internal Revenue Services offers further guidance. It would also be smart to talk to a CPA or tax professional for help.

Do the New Age Standards Help or Hurt My Retirement Planning? 

Americans are living longer and working longer. As a result, for some, the ability to continue making contributions into an IRA beyond age 70 ½ could be beneficial.

As long as you’re still working and have earnings from which deferrals can be made, then you can defer income into individual retirement accounts until you are 72.

Part-time workers who were excluded from participating in an employer’s 401(k) may find that, under the act, participation in this retirement plan is now possible.

Previously, if you worked less than 1,000 hours per year, you were generally ineligible to participate in a 401(k).

Under the act, except for those covered by collective bargaining agreements, the law requires employers who maintain a 401(k) plan to offer one to any employee who works more than 1,000 hours in one year or 500 hours over three consecutive years.

Do Any Changes Impact IRA Inheritance?

Previously, if you inherited an IRA, you could “stretch” your distributions and tax payments over your life expectancy.

Now, for IRAs inherited from the original owner who passed away on or after Jan. 1, 2020, the act requires that beneficiaries withdraw those assets within 10 years of the death of the account holder.

Exceptions to this 10-year rule include distributions for surviving spouses, minor children, people with disabilities, or people with a chronic illness. If you’re a beneficiary of an inherited IRA and the original owner passed away before Jan. 1, 2020, then you don’t need to make any changes.

How Does the SECURE Act Encourage Small Business Owners to Start Retirement Plans for Their Employees?

Under the act, small business owners are incentivized to start a qualified retirement plan. The act provides a start-up retirement plan credit for smaller employers (100 or fewer employees) of $250 per eligible non-highly compensated, up to a maximum cumulative credit of $5,000. For 2022, the non-highly compensated employee threshold is $135,000.

The act also facilitates the adoption of “MEPs” (multiple employer plans) by allowing completely unrelated employers to participate in a MEP without fear of repercussion under what had been known as the “one bad apple” rule. Now, not all participants in a MEP will face adverse consequences if one of the participants fails to satisfy the tax qualification rules for the MEP.

Get the Most out of SECURE: Contact a Retirement Planner Today!

There are many other intriguing aspects of the act that could be of benefit to those who participate in qualified plans that feature auto-enrollment. And there are additional transparency requirements about expenses and amounts of potential income stipulated within the act.

 For more information about how the provisions of the SECURE Act may benefit you, please contact us or another professional financial advisor.

David Guttery and Brandon Guttery offer products and services using the following business names:  Keystone Financial Group – insurance and financial services | Ameritas Investment Company, LLC (AIC),  Member FINRA/SIPC – securities and investments | Ameritas Advisory Services (AAS) – investment advisory services. AIC and AAS are not affiliated with Keystone Financial Group. Information provided is gathered from sources believed to be reliable; however, we cannot guarantee their accuracy. This information should not be interpreted as a recommendation to buy or sell any security. Past performance is not an indicator of future results.

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