The “Setting Every Community Up for Retirement Enhancement” Act (SECURE Act) was signed into law this past December, and it has potential ramifications for anyone who has a retirement account. In particular, it will have significant ramifications for anyone engaged in estate planning whose retirement accounts may disburse payments after they have passed away. As such, anyone trying to plan their estate with a retirement account should be aware of the impact the law might have on you and your loved ones.
First, the SECURE Act removed the maximum age at which someone can deposit funds into traditional Individual Retirement Accounts (IRAs), when previously contributions into the account had to end when the individual reached 70.5 years of age. Additionally, the age at which Required Mandatory Distributions (RMDs) from traditional IRAs begins was raised from 70.5 years old to 72 years old. It also allows for limited withdrawal from IRAs for purposes such as childbirth or adoption expenses, or to pay towards qualified student loan payments.
Most significantly, however, the SECURE Act will have a major impact on how RMDs can be distributed from IRAs, particularly to whoever inherits the IRA if its owner dies while there is still money in the account. Previously, RMDs began when a person reaches the minimum age and could continue theoretically forever, and many people created “stretch” IRAs that would allow for disbursement theoretically indefinitely. Now, the entirety of an IRA must be distributed within ten years after its owner dies, effectively abolishing the stretch IRA.
There are many other possible consequences to the SECURE Act, and if you’re planning your estate, you’ll want the guidance of an elder law attorney to help devise a retirement plan that works for you. The attorneys at Hobson-Williams, P.C. are skilled in all aspects of elder law, and are dedicated to representing clients with diligence and compassion. To speak to an attorney or to schedule a consultation, call 866-825-1LAW.
