Banking Spectrum - What's New?

Significant Retirement Plan Changes Coming!

On Dec. 20, the President signed the Setting Every Community Up for Retirement Enhancement Act (SECURE Act).

Prior to the SECURE Act, participants in IRAs and qualified retirement plans generally were required to begin receiving certain minimum distributions by April 1 of the calendar year following the year in which the participant attains age 70½. Acknowledging that Americans are living and working longer, the SECURE Act increases the RMD age from 70½ to 72, applicable to distributions made after Dec. 31, 2019, for individuals who reach 70½ from Jan. 1, 2020 and later.

Additionally, the inherited IRA has been changed from the "stretch" of a beneficiary's life expectancy to 10 years. Non-spousal beneficiaries must now take required minimum distributions (RMDs) based on their life expectancy, so passing the IRA to younger heirs stretched how long it can continue to grow before funds must be withdrawn.

Taxpayers will also have the option to keep contributing to individual retirement accounts after the age of 70½ (which was previously not permitted), as long as there is earned income.

Plan sponsors will need to evaluate, and likely update, current policies and procedures for notifying participants of an upcoming RMD trigger date and for updating any notices that it sends to participants regarding RMDs. Stay tuned for more details related to all the provisions that affect retirement accounts. Updates will be posted soon in The Gold Book.