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NEW LAW MAKES MAJOR CHANGES TO IRAs.
The "Setting Every Community Up for Retirement Enhancement Act of 2019" will go into effect after December 31, 2019.
Age cap repeal. The Act removes the age cap for traditional IRA contributions, which is currently 70 1/2. This change would allow older workers to stash a chunk of their earned income in a traditional IRA, just as they can currently in a Roth IRA.
RMD age increase. The House bill increases the starting age for required minimum distributions from retirement accounts to 72, from 70 1/2 currently.
Stretch IRA loss. Although the Secure Act may benefit some retirement account owners, it’s not so friendly to nonspouse heirs. The legislation erases these heirs’ ability to stretch out required minimum distributions from inherited retirement accounts over the nonspouse heirs’ own life expectancies—a move that allows more of the money to grow tax-deferred and minimizes the heirs’ income tax bill. Instead, the legislation mandates that the inherited assets be withdrawn within 10 years.
I also want to respond directly to the RIGM's post concerning High 401K Balance, RMD's and Withdrawal Strategies, but I thought it would be important for everyone to consider these IRA law changes in their future planning.
The "Setting Every Community Up for Retirement Enhancement Act of 2019" will go into effect after December 31, 2019.
Age cap repeal. The Act removes the age cap for traditional IRA contributions, which is currently 70 1/2. This change would allow older workers to stash a chunk of their earned income in a traditional IRA, just as they can currently in a Roth IRA.
RMD age increase. The House bill increases the starting age for required minimum distributions from retirement accounts to 72, from 70 1/2 currently.
Stretch IRA loss. Although the Secure Act may benefit some retirement account owners, it’s not so friendly to nonspouse heirs. The legislation erases these heirs’ ability to stretch out required minimum distributions from inherited retirement accounts over the nonspouse heirs’ own life expectancies—a move that allows more of the money to grow tax-deferred and minimizes the heirs’ income tax bill. Instead, the legislation mandates that the inherited assets be withdrawn within 10 years.
I also want to respond directly to the RIGM's post concerning High 401K Balance, RMD's and Withdrawal Strategies, but I thought it would be important for everyone to consider these IRA law changes in their future planning.