Has Your TX Estate Plan Been Affected by the Secure Act?
Anyone with an estate plan must review it to determine if new legislation has changed it at all.
It was in December of 2019 that President Trump signed the SECURE Act into law, and it has greatly changed retirement plans and the rules surrounding them. This new law has made five major changes to retirement law, and these changes are outlined below.
Barriers to 401(k) and 403(b) for Small Businesses and Part-Time Workers Reduced
The cost of entering into a 401(k) or 403(b) for part-time workers and employees of small businesses was once considered quite restrictive. SECURE has provided some tax incentives for small employers to create these plans, making it easier for everyone to enter into them and build their retirement savings.
People with Retirement Plans do Not Have to Take Distributions Until They are 72
The law requires that even if you do not have a need for it, you must withdraw some of your retirement savings. You also have to pay tax on it. While once that age was 70 years old, now you can wait until you are 72 to pull out that money, giving you two more years of collecting interest on it, and saving the taxes that you would have paid.
No Age Limit on Traditional IRAs
Prior to the passing of the SECURE Act, you could not make contributions to a traditional IRA after the age of 70. This is because the law determined that at that point, you were not going to save anything else. Now, SECURE has removed that stipulation so you can continue contributing to your traditional IRAs as long as you would like.
More Options for Annuities Inside 401(k)s
This is the change for which the insurance companies lobbied the hardest. This change has made trillions of dollars in employer-sponsored retirement plans available to invest in annuities. This change also removes the fiduciary responsibility from employers for managing the retirement plans. Unfortunately, this change does not benefit employees, as their 401(k)s are going to become much more complex. All employees should watch their 401(k)s and speak to their attorney if they think annuities have become an option.
Changes to Distributions for Inherited IRAs
Prior to the new law, individuals who inherited money from an IRA had to take out a minimum amount every year, whether they needed it or not. Now, though, beneficiaries have 10 years from the date of the death to pull out the inherited funds.
Our Texas Estate Planning Attorney Can Help
Estate planning has always been filled with many complexities and the new SECURE Act only makes it more complicated. If you are planning your estate or planning for your retirement, our Pearland estate planning attorney at John Powell III, P.C. can help. Attorney Powell will ensure that your estate plan is complete and that it includes everything you and your future need. If you are ready to start planning for tomorrow, call us at (832) 850-6095 or contact us online to schedule a meeting.