We’ve all heard that “the only constant is change,” and we want to shed light on some significant changes to retirement savings legislation called the SECURE Act. In a nutshell, the SECURE Act (Setting Every Community Up for Retirement Enhancement) was approved by the Senate in December 2019 and for the most part helps millions of Americans save more money for retirement. These changes affect certain rules related to tax-advantaged retirement accounts.

There is a lot to unpack about this new legislation and while all of the changes will be important, there are two key takeaways relevant to our Live Oak Private Wealth Clients. First, this law will affect when you must begin to take money out of your IRA and 401(k). Prior to passing the SECURE Act, qualified account holders with these plans had to withdraw the required minimum distributions (RMD) in the year they turned 70 ½. The new law increases the age of the RMD to the year in which one turns 72.  This may be welcome extension to those who were currently facing the requirement to begin withdrawals which they may not need.

Another notable change may affect those who stand to inherit an IRA or 401(k), particularly for those beneficiaries that are either an individual or trust.  Currently, inherited accounts can distribute the assets over the beneficiary’s lifetime.  The SECURE Act states that the assets must be distributed to the non-spouse beneficiary within 10 years, which could have repercussions on your estate planning.  403(b) and 457 plans for government workers and Thrift Savings Plan for federal employees are included too! The good news is the beneficiary has choices during that 10-year period.

Changes in financial laws happen, sometimes more frequently than we like.  This is especially true if there is a change in the Oval office.  Consequently, someone’s financial plan is never finished.  There are always tweaks especially when it comes to estate planning. Clients deserve a firm that not only leads with planning but also routinely (at least once a year if not twice) reviews their plan as the landscape keeps changing, as Live Oak Private Wealth does.

If you have any questions or concerns about the SECURE Act and the impending legislation changes, please contact us and we’ll walk through how these changes could affect you and your financial goals.