An image of a senior couple walking on a path

For most Americans, retirement is a crucial part of their life goals and plans. After working diligently for many years to provide for ourselves and our families, most of us want an easier period of time that we can spend doing the activities we want to do, regardless of work obligations. Whether that means spending more time with family, traveling the world, or reading the rest of a personal library, we all have things we want to do more as we get older.

Unfortunately, securing a retirement has become much more difficult for many Americans in recent years. It is obvious that Social Security is no longer guaranteed to cover all your expenses in the waning years of life, and many times, we (understandably) forget to save on our own. In an effort to overcome this issue, Congress developed and passed the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019.

The SECURE Act is a major piece of legislation that affects almost everyone in Silicon Valley as well as the rest of the country. For that reason, today’s blog post will focus on how the SECURE Act affects you and how The Law Offices of Janis A Carney can help you develop an effective estate plan that accounts for the SECURE Act.

What Is the SECURE Act?

The SECURE Act is federal legislation that alters many of the details surrounding the retirement saving and distribution rules in the United States. The SECURE Act is designed to help mitigate some of the issues the country faces with regard to retirement savings, and due to the number of things it changes, it affects almost every citizen in the United States.

Notably, the SECURE Act raises the age at which people must take required minimum distributions (RMDs) from traditional IRA accounts from 70½ to 72, removes the “stretch IRA” option for non-spousal beneficiaries, and it allows people to continue to contribute to IRAs as long as they are working. Moreover, the SECURE Act encourages small businesses to sign employees up for retirement savings plans, allows long-term, part-time workers to be covered under 401(k) plans, and it encourages employers to set up greater automatic savings for their workers.

How Does it Affect Estate Planning?

Whenever a major piece of legislation that affects retirement is passed, you should contact your estate planning attorney and financial advisors to go over how any major changes affect your current plan. The SECURE Act is no different.

When it comes to estate planning, one of the biggest effects the SECURE Act will have is changing the way IRAs are handled by savers and beneficiaries alike. Prior to the enactment of the Act, beneficiaries of IRA accounts were able to stretch the distributions of the account over their whole lifetimes. Now, the SECURE Act requires non-spousal beneficiaries to take out the entire value of the account within 10 years of inheriting it. This change alone will alter the way many estate plans are handled, as it could lead to a heightened tax burden for people who inherit IRA plans from their parents. Currently, many estate plans are designed to utilize “stretch IRAs” and spread distributions over a lifetime. You should definitely contact your estate attorney to see if this affects you.

Moreover, the SECURE Act gives people the ability to contribute to their IRA accounts for a longer amount of time. If you plan on working into your 70s, this could be great news! This change and the increase in age for required minimum distributions help catch the retirement system up to current life expectancies. You should visit with an expert to see how these two changes will affect the finances involved in your retirement plans.

Contact The Law Offices of Janis A Carney Today

The SECURE Act will change the way retirement is handled for many people. At The Law Offices of Janis A Carney, we pride ourselves on understanding this legislation inside and out, so that our clients rest assured that they can reach their retirement goals. Contact us today to learn more about the SECURE Act and make changes to your estate plan.