How does the SECURE Act impact you?

By: Austin Leavitt, MS, CFP®,
Senior Financial Planner
The Financial Advisory Group

Tucked inside Congress’s 2019 year-end spending bill, the Setting Every Community Up for Retirement (SECURE) Act includes several provisions that merit further discussion with your financial & legal counsel. Here are the top things you should know:

1) Age limit for IRA contributions revoked: The age limit for making contributions to your traditional IRA (previously set at age 70 ½) is gone, allowing those who continue to work into their 70’s to continue to contribute to an IRA or other qualified plan as long as they can show earned income.

2) Initial RMD age increased to 72: The age at which retirees must begin taking Required Minimum Distributions (RMDs) from their retirement plans changed from 70 ½ to 72, allowing those born after 6/30/1949 to (temporarily) delay the tax impact of these annual distributions.

3) Qualified Charitable Distributions (QCDs) abide: For those age 70 ½ or older with other income on their tax return, the tax impact of annual Required Minimum Distributions (RMDs) from a retirement plan can be sidestepped by designating a qualified charity as the RMD recipient (limited to $100,000 per year, per person). Consult your financial advisor to determine if a QCD or a gift of appreciated securities is more appropriate for you.

4) The “Stretch IRA” goes away: Under the new law the contents of an inherited IRA must be disbursed within ten years of the original owner’s death, with spouses and minor and/or disabled children as exceptions. This has potential to significantly increase beneficiaries’ tax exposure and should signal an urgent meeting with financial/tax counsel. More complex trusts such as CRT’s (Charitable Remainder Trusts) and CLT’s (Charitable Lead Trusts) may offer attractive tax benefits by extending the payout period over time.

5) Roth Conversions & Retirement Accounts: Under the new law Roth-based (post-tax) assets have become much more desirable for retirement and estate planning. There are no RMD’s, spousal rollovers can add to tax-free accumulation, the surviving spouse receives tax-free retirement income and the trust tax problem associated with pre-tax retirement accounts is eliminated.

Schedule a meeting NOW with your legal and financial advisors to discuss strategies to control your money. Consider donating your appreciated securities while the market is high, and consolidating the assets you’ve designated for charity into a Donor Advised Fund to reap the maximum tax benefits from your charitable giving. Securing your legacy is easier than you think and is rewarding beyond measure.

Donors who commit to a planned gift of $25,000 or more to the OMS Foundation are welcomed into its prestigious R.V. Walker Society. Visit the R.V. Walker Society page to learn more about planned giving options, and contact Mary DiCarlo at (847)-233-4325 to discuss your commitment.

*The Financial Advisory Group, Inc. is a fee-only registered investment advisor. Our core services include investment management, financial planning & tax services. For more information, please visit or call Austin Leavitt at 832-683-5084.