The SECURE Act
New law ups age for mandatory $ withdrawals
Going into effect this year are some provisions of the SECURE Act, acronym for a new law called Setting Every Community Up for Retirement Enhancement. One of its provisions delays the age
for mandatory withdrawals from IRA and 401K retirement plans. Roth IRAs are not affected in the same way.
The new law raises from 70.5 to 72 the age for required mandatory distributions (RMDs) for those who haven’t reached age 70.5 by the end of 2019. Sounds like a minor alteration on the surface, but for some folks, it could be a nice gain. The change in RMD rules gives older working people an extra 18 months to sock away money for their retirement.
We’re living longer and working longer
Americans are not only living longer today, but we are also working longer. Those two demographic factors led legislators to ask, “Why shouldn’t they be able to contribute to their retirement accounts a little longer?” Since about 75 percent of all Americans start saving too late or put away too little for their later lives, that year-and-a-half extension could make a difference for many of them.
Withdrawal age out of tune with times
Mandatory withdrawals from 401(k) plans and traditional IRAs have been irksome to older folks, both those who have saved a lot and those who haven’t. Some retirees deeply resent having to take money out of their retirement accounts before they really need the extra cash. Expanding the mandatory withdrawal age gives them more time to earn interest and dividends in those accounts. Under the new terms, both savers and non-savers could have more resources when they no longer want to, or are able to, work.
As traditional pensions disappear, most of us now need to put away some of our own money to live comfortably in retirement. The majority of us rely largely on 401(k) plans and IRAs to fill in Social Security gaps. With more time to accumulate earnings in those accounts, we can now add some extra funds for the future. Afterall, we could reach age 100 or more, as many folks do today.
If your employer doesn’t offer a retirement savings plan or you don’t know how to start one, contact Ron VanSurksum at Advanced Asset Management to set up an account. The SECURE Act also affects part-time workers, graduate students, new parents, even businesses. (For details on those provisions, follow our blog for future coverage of the SECURE Act, or make an appointment online to learn more at aamllc.com).
For further details on how the new law SECURE act affects you, contact us now!
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