How the SECURE Act Affects your Retirement Plan

Since the end of 2019, the SECURE Act (Setting Every Community Up for Retirement Enhancement) has affected major changes to retirement plans. Anyone with an estate plan that involves moving IRA’s through a trust may need to make adjustments.

This law has raised the age at which an individual must begin taking IRA-required minimum distributions (RMD’s) from 70 1/2 to 72. For those with trusts, there are additional considerations. The prior law that allowed beneficiaries of a trust to receive disbursements over their lifetime, compounding interest, has been removed. There is now a reduced “stretch” that requires distribution over a maximum time period of ten years, making accounts less valuable to the beneficiaries.

But there are exceptions to the ten year limit:

The surviving spouse
The minor children of the account owner (until age of majority)
Beneficiaries that are not more than 10 years younger than the account holder
Disabled beneficiaries
Chronically-ill beneficiaries

Because a lot of people take their retirement benefits through a trust, this new law will have a ripple effect through already existing estate plans. This makes it a good idea to review your documents with your attorney to see if your trust includes designating IRA’s or plans through the trust. If this is the case, your current version may not work the way that you intended. An informed estate planning attorney can help you to make sure that your documents will reflect those needs. Remember that the team at Hillsborough Wills & Trusts has the expertise to help you Build Your Circle of Security through strong legal documents and good counsel. We are here to help you succeed! Contact us at: https://hillsboroughwills.com/contact.

https://www.actec.org/estate-planning/how-the-secure-act-may-impact-your-retirement-plan