How do these changes in the SECURE Act affect me?
- An older RMD age will allow IRA owners to defer withdrawals, allowing assets to continue growing for longer.
- Removing the age limit for individuals to contribute to their IRA accounts benefits those who retire at older ages and seek to continue contributing to their IRAs.
- IRA beneficiaries must withdraw assets in an inherited IRA or 401(k) within ten years.
- Before the law, if you withdrew assets from your IRA before age 59.9, you were subject to an income tax and a 10% penalty. The secure act adds an exception to this rule for new parents, allowing for a $5000 withdrawal after the birth or adoption of a child.
- Part-time employees who work at least 500 hours annually for three years may contribute to a 401(k) plan. This is a significant decrease from the earlier 1,000 hours per year requirement.