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SECURE Act 1.0 &2.0

The Setting Every Community Up for Retirement Enhancement (SECURE) Act was passed in December 2019 and became a law as of Jan. 1, 2020. That legislation, referred to SECURE Act 1.0, created changes for long-term retirement savings and has financial impacts for Americans at every age. Here are four of the changes that affect people:

  • Employers were equipped to offer better options for workers to fund retirement plans

  • The required minimum distribution age increases to 72, up from 70 1/2.

  • The age limit for IRA contributions has been removed.

  • Inherited retirement account distributions must be taken within 10 years.

This meant people could start earlier on creating retirement accounts as well as hold off longer before taking distributions from their IRA account. Ultimately, they could potentially contribute to their IRA for more years. At the same time, the law requires inherited IRA accounts (other than for spouses) to be fully taken within ten years. Before this law, people could stretch out those payments.

The SECURE Act 2.0 took effect in January 2023. There were some new provisions that were included in this law:

  • The required minimum distribution age increased again, this time to 73, and then to 75 in 2033.

  • QCD donations are still allowed, but now an IRA owner could use a QCD to create a Charitable Gift Annuity. This dual benefit eliminates the 10-year withdrawal requirement and provides a gift for your favorite charity

  • Increased limit for catch-up contributions to IRA accounts

Both of these laws made other changes beyond the few listed here. It would be wise to talk with your financial planner to discuss any of those options that might be right and advantageous for you.

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