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How Does the Secure ACT of 2020 Impact Your Retirement?

Americans are living longer and working well past the traditional retirement age of 65 years old. Approximately one-quarter of working Americans say they plan on not retiring, according to an Associated Press- NORC Center for Public Affairs Research poll. For many, the reason is because they cannot afford to retire, forcing them to stay in the workforce longer than they would like. A bill that was recently signed into law in December 2019, the Setting Every Community Up for Retirement Enhancement (Secure ACT), aims to make it easier for workers to save money for retirement.

The Secure ACT

The Secure ACT imposes several changes on estate planning and retirement rules that could make it easier for those who work for small businesses, work part time, or have low income to save for retirement.

Contributions to Traditional IRAs

The maximum age for traditional IRA contributions prior to the Secure Act was 70 ½ years old. Under the new provisions, you may continue to make contributions to your traditional IRA past 70 ½ if you are still working. However, this change will apply only to contributions for tax year 2020, so the 70 ½ age limit still applies for the upcoming 2019 tax year.

Withdrawals for Childbirth or Adoption

Parents may take birth or adoption distribution from a qualified contribution plan without facing the typical ten percent early withdrawal penalty if the money is taken out within one year of the birth or adoption. Those who do not have enough saved to cover the costs associated with childbirth or adoption may now make penalty-free withdrawals of up to $5,000 per parent.

Required Minimum Distribution Age

Under the new law, the required minimum distribution age is 72 for those who turn 70 ½ during calendar year 2020. Those who have already turned 70 ½ and have begun taking required minimum distributions from their IRA or 401(k) should continue to do so.

Long-Term, Part-Time Workers

Prior to the Secure Act, long-term, part-time workers were not allowed to participate in their company’s 401(k) program if they worked less than 1,000 hours per year. Now, employers with 401(k) plans must offer a plan to employees who either worked more than 1,000 hours a year or 500 hours over three consecutive years.

Stretch Provision

Previously, beneficiaries of inherited retirement accounts could stretch their distributions over their life expectancy. Under the Secure Act, certain designated beneficiaries must now withdraw the entire balance within ten years of the account owner’s death with the exceptions of surviving spouses, minor children, chronically ill beneficiaries, and those who are less than ten years younger than the account holder.

Media Estate Lawyers at Eckell, Sparks, Levy, Auerbach, Monte, Sloane, Matthews & Auslander, P.C. Assist Clients with Retirement Planning

If you have questions regarding the Secure Act of 2020 or retirement in general, contact one of our experienced lawyers today. Our dedicated Media estate lawyers at Eckell, Sparks, Levy, Auerbach, Monte, Sloane, Matthews & Auslander, P.C. can explain your legal options and assist you with estate and retirement planning. Contact us online or call us at 610-565-3701 for a free consultation. Located in Media and West Chester, Pennsylvania, we also serve clients in Delaware County, Chester County, and Montgomery County.

A Message to Our Customers About Coronavirus COVID-19:

A Message to Our Clients About Coronavirus COVID-19:

We want to assure everyone that during this unprecedented and difficult time, we are still operating and will continue to meet all the legal needs of the residents of the Delaware Valley. While the Governor’s recent orders have restricted the operations of some businesses, Eckell Sparks has deployed a variety of applications and hardware that allows both our attorneys and our support staff to confer with clients remotely, provide consultations to those seeking legal advice, and continue to provide the high level of legal services to our clients as we have always done. For more than 50 years, our Firm has been a force in the Delaware Valley legal community. And by now also leveraging technology, we will continue to do so both during, and after, the current public health emergency.

So, if you need us, we are here. Are you an employer and don’t know what to do under all the new Corona-virus laws being passed in Washington? Were you injured in a car accident either before, or during, the current crisis? Call or email us. We can help. 610-565-3700.

Stay safe out there.