Effective January 1, 2020
Jim Lorenzen, CFP®, AIF®
Two Key Changes For Individuals:
70-1/2 is out.
New Law Raises Age for RMDs from 70½ to 72: Under the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019, if you turn 70½ years old on or after January 1, 2020, you are eligible for the law’s changes and generally must begin taking RMDs by April 1 of the year following the year that you turn age 72.
People who turned 70½ years old in 2019 are not eligible for the law’s changes and generally must begin withdrawing money by April 1, 2020
You can use the RMD calculator from FINRA here.
No more “Stretch IRA” (for most).
It’s eliminated for most beneficiaries of Traditional and Roth IRAs whose owners pass away in 2020 or later (Note: previous rules still apply to certain beneficiaries and to all inherited IRAs whose owners passed away before 2020). There are no mandatory annual distributions, but the entire inherited Traditional or Roth IRA balance must be withdrawn by the end of the tenth year.
There are some exclusions as well as other changes – talk with your financial or tax advisor.
Business Owners
There are a number of key changes for business owners, including
- Expanded access to annuities within retirement plans in order to help retirees establish their own “pension” plans.
- Retirement plan statements will be required to include a lifetime income disclosure at least once during any 12-month period
- Multiple-Employer plan rules relaxed – this allows a number of unrelated businesses to set-up a plan with one provider/administrator in an effort to reduce costs – this will help small businesses most.
Of course, there’s more; but, this should give you an idea of why it will pay to work closely with your financial and tax advisors.
Have a great 2020!
Jim
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Jim Lorenzen is a CERTIFIED FINANCIAL PLANNER® professional and An Accredited Investment Fiduciary® in his 21st year of private practice as Founding Principal of The Independent Financial Group, a fee-only registered investment advisor with clients located in New York, Florida, and California. He is also licensed for insurance as an independent agent under California license 0C00742. IFG helps specializes in crafting wealth design strategies around life goals by using a proven planning process coupled with a cost-conscious objective and non-conflicted risk management philosophy.
The Independent Financial Group does not provide legal or tax advice and nothing contained herein should be construed as securities or investment advice, nor an opinion regarding the appropriateness of any investment to the individual reader. The general information provided should not be acted upon without obtaining specific legal, tax, and investment advice from an appropriate licensed professional.
