How Recent Legislation Will Affect Your Retirement

How Recent Legislation Will Affect Your Retirement

January 21, 2020
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The Setting Every Community Up for Retirement Enhancement (SECURE) Act was signed into law on December 20, 2019. Here’s how it will affect retirees.


  1. Delay the Start of Required Minimum Distributions (RMDs)

Currently, plan participants and IRA owners must begin taking distributions at age 70½. The SECURE Act delays RMDs until age 72. This provision recognizes that life expectancy has increased since the first RMD rules were created in 1986.


  1. Repeal of Age Limitations for IRA Contributions

The legislation recognizes that more Americans are living longer and working past normal retirement age. As a result, the SECURE Act permits those over age 70½ with earned income to contribute to a traditional IRA.


  1. Eliminate “Stretch” IRAs

The SECURE Act requires beneficiaries to completely withdraw inherited IRAs and retirement plans within 10 years and pay the resulting tax liability. The 10-year rule does not apply to some beneficiaries, such as surviving spouses, disabled individuals, minors, and those who are not more than 10 years younger than the account owner.


  1. Several Changes for Small Businesses
  • Small businesses can receive a tax credit for retirement plan start-up costs up to $5,000. An additional tax credit of $500 a year for three years will be available if the plan offers automatic enrollment.
  • Part time employees that have worked at least 500 hours per year for the past three consecutive years will now be eligible to participate in their company’s plans.
  • The Act also permits unrelated small businesses to share the administrative and financial burden of establishing and maintaining a retirement plan. It also shields employers from the breach of another’s administrative and fiduciary duties.


The change in RMD rules can be confusing for people who turned (or are about to turn) 70 ½ in 2019 or 2020. Next week I’ll post a blog that explains the guidelines for these folks.


M Financial Planning Services is located in Marlton at 57 S. Maple Ave. Call Ed at 856-810-7701 or email him at Visit  M Financial Planning Services is not affiliated with and securities offered through LPL Financial, Member FINRA/SIPC. The tax information provided is not intended to be a substitute for specific individualized tax planning advice. We suggest that you consult with a qualified tax advisor.