The Setting Every Community Up for Retirement Enhancement (SECURE) Act was enacted Jan. 1, 2020. With it came the most significant changes to retirement plans since 2006. Here's what changed and what stayed the same.
- You can contribute to your IRA longer. You have more time to save as you can now contribute to your IRA past the age of 70 1/2.
- The required minimum distribution (RMD) age changed. The SECURE Act changed the age at which you must start taking RMDs from your retirement account, from 70 1/2 to 72 for those born July 1, 1949 or later. This change gives your account additional time to grow. (Note: The RMD requirement has been waived for 2020, per the CARES Act signed into law on March 27, 2020).
- Non-spousal IRA beneficiary rules changed. If you name someone other than your spouse as the beneficiary of your IRA, they now have to withdraw the entire amount within ten years. Previously, they could stretch this over their lifetime.
What Stayed the Same
- You can still withdraw funds starting at age 59 1/2 with no penalty. You can still access your retirement savings prior to age 59 1/2, but there is a 10% early-withdrawal penalty. (Note: You may now withdraw up to $100,000 without penalty from your retirement account in 2020, per the CARES Act).
- Spouses can still take distributions throughout their lifetimes. When you name your spouse as the beneficiary of your IRA, they can continue to take distributions from the account throughout their lifetime.
- If you're 70 1/2 or older, you can still make a tax-free gift to a qualified charitable organization. You can transfer any amount up to $100,000 per year directly to a qualified charitable organization without paying income tax on the distribution. The transfer generates neither taxable income nor a tax deduction, so you benefit even if you do not itemize your deductions. Your gift will also be put to use today, allowing you to see the difference you are making.
Your Next Steps
If you have questions about the impact the SECURE Act will make on your retirement plans, be sure to make an appointment with your financial adviser. They can review your plans (including your beneficiary designations) and ensure they still accomplish what you want them to.
Giving from your IRA
There are many ways you can still use your IRA to support St. Edward's University. To learn more, contact Gregory Perrin, associate vice president for development and alumni relations at firstname.lastname@example.org or 512-448-8452 today.