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5 Things You Should Know About the SECURE Act Thumbnail

5 Things You Should Know About the SECURE Act


5 Things You Should Know About the SECURE Act

On December 20th of last year, a new bill titled “Setting Every Community Up for Retirement Enhancement Act” or SECURE Act was signed into law (Congress.gov, 2019). 

If you have—or plan to have—a retirement account, this will affect you and will possibly cause you to re-think certain strategies.

This bill offers several adjustments surrounding saving and preparing for retirement. Let me take a minute or two to highlight 5 of the most prominent changes. 

1) Required minimum distributions from your retirement account will now start at age 72 

Before, you had to take your RMD in the year you turn 70 ½.  This will allow you to continue possible growth in your account before being forced to take money out annually (Bureau of Labor Statistics, 2019).

 2) Penalty free withdrawals for qualified births & adoptions

New parents can now access their retirement account without a penalty imposed by the IRS in the first year of birth or adoption of your child. You are allowed to withdraw $5,000 and each parent can do so. 

3) Non-spouse beneficiaries will lose the opportunity to stretch out distributions over their lifetime

Under the new act, beneficiaries of an inherited retirement account will be required to liquidate the account within 10 years of receiving the account. This means there is a possibility that there will be more income tax to be paid. Certain exemptions apply which include: spouses of the deceased, disabled or chronically ill beneficiaries, and certain minors (until they reach the age of majority and individuals who are not more than 10 years younger than the deceased). 

4) Eliminating the age limitations on IRA contributions

Previously, you were no longer eligible to contribute to an IRA once you reached age 70 ½. Now, beginning in 2020 there is no age cap to contribute to an IRA as long as you have earned income.

5) 401(k) eligibility for part time workers

Previously, employees were required to work 1,000 + hours per year to be eligible to participate in a 401(k). With this new act it lowers the requirement to those who have worked only 500+ hours per year, for the past 3 years. In addition, the employee must be 21 years old or older. 

So, there you have it: 5 changes made in the SECURE act that could be making a difference in how you save for retirement. 

For more information, please give me a call!



Bureau of Labor Statistics. (2019, September 4). News Release: U.S. Department of Labor. Retrieved from bls.gov: https://www.bls.gov/news.release/pdf/ecopro.pdf.

Congress.gov. (2019, June 3rd). H.R. 1994 - 116th Congress (2019-2020): Setting Every Community Up for Retirement Enhancement Act of 2019. Retrieved from Congress.gov: https://www.congress.gov/bill/116th-congress/house-bill/1994.

Tracking: 1-938118