On December 20, 2019, the Setting Every Community Up for Retirement Enhancement Act (know as the SECURE Act) was signed into law. Though the Act covers a lot of ground, it contains provisions intended to give older Americans more options to help keep them from outliving their assets.
One of the major components of the Act is raising the age for required minimum distributions from 70.5 to 72. Along with this, another important change is that the traditional IRA maximum contribution age limit has been removed, which allows people to continue making contributions after age 70.5.
Together, these two changes essentially allow individuals the choice to defer taking distributions for an additional 18 months, and grants them the ability to continue saving. As life expectancies have gradually increased and many people wind up working later into life, these changes should give people more flexibility.
As with any financial regulation changes, you need to know and understand how they can impact you as you plan for and head into retirement. It’s a good time to ask yourself:
– If you plan to continue saving, have you budgeted for these additonal contributions?
– Are you aware of the tax implications of both options – continuing to contribute vs. taking distributions?
– Have you conducted a recent review of your portfolio with these changes in mind to ensure you are still on-target?
Talk to your American Federal Banker for further details about the SECURE Act. They can help determine what it means for you, and how you can use it to plan for now and the future.