On December 22, 2019, the President signed new federal legislation, commonly known as the SECURE Act, which made major changes in how retirement plans—such as IRAs, 401(k)s, etc.—are administered and made available.

The problem is that most individuals have no idea unless their financial advisors or accountants inform them of this huge change in the law. We are going to attempt to contact most of our clients about the change, but it is a monumental undertaking because almost everyone who has worked, in the private sector for sure in the previous 20 years, has a retirement plan, and not a pension.

To summarize, among the most significant changes under the SECURE Act is the following:

  1. Raised the earliest age at which the owner of a retirement plan must begin taking a Required Minimum Distribution (RMD) from 70½ to 72.
  2. Permits an owner to make contributions to a traditional IRA after age 70½.
  3. Requires that, at the owner’s death, an inherited IRA is to be fully distributed out to most non-spouse beneficiaries (such as children or grandchildren) within 10 years.
  4. For 401(k) plans:  it allows small employers to join together to provide 401(k) plans for employees; it allows part-time workers to enroll in 401(k) plans; and permits 401(k) plans to provide annuities as a payout option for lifetime income.
  5. Applies to all types of qualified plans [i.e. §§401(k), 403(b), 457(b), 401(a), ESOPs, Cash Balance plans, lump sums from defined benefit plans and IRA].

Considering these changes, if a retirement account is a major part of the assets being distributed in your estate plan, then it WILL BE beneficial to examine your current estate plan and review investment strategies with your financial advisor.

If we can assist you as a current client in this regard or would like to consult with one of our estate planning attorneys, please contact us.  This is part one of a three-part posting on the SECURE Act.