How the Newly Passed SECURE Act Impacts You and Your Clients

On Friday, December 20th, the SECURE Act (Setting Every Community Up for Retirement Enhancement Act) was signed into law, bringing with it multiple changes to the retirement landscape that might affect you and your clients in 2020.

Here are a few changes we identified that may be relevant to your business:

The age for Required Minimum Distributions (RMDs) has been increased to 72

The age for RMDs was increased from 70 ½ to 72, effective January 1, 2020. This only affects investors who turn 70 ½ in or after 2020. Your clients that turned 70 ½ in 2019 are not impacted.

The age cap for Individual Retirement Account (IRA) contributions has been removed

Previously, investors aged 70 ½ and older were ineligible for IRA contributions. Effective January 1, 2020, there will be no age restriction on contributions. However, while there is no age restrictions, contributors to an IRA must earn an income.

Inherited retirement accounts must be fully distributed within 10 years of the inheritance

On and after January 1, 2020, investors who inherit a retirement account have 10 years to distribute the account in its entirety (the remaining balance will be distributed as an RMD on the 10th year of the inheritance). In general, inherited account distributions can no longer be stretched across the inheritors lifespan. There are exceptions to the rule, however. Spouses, inheritors no more than 10 years younger than the original account owner, inheritors with disabilities, and minor children are excluded from the 10-year rule.

What we will do to help you adhere to the new rules

As the law goes into effect, Orion Portfolio Solutions will update the RMD dashboard to reflect changes to the age requirement and distribution schedule for inherited accounts. We will also work with our custodian partners to update forms and processes associated with RMDs.

Our financial planning platform will also be updated to reflect the updated RMD and IRA contribution age requirements.

The SECURE Act will go into effect January 1, 2020. We will continue to review the contents of the law, and will provide updates as important information is uncovered and actions are taken to help you adhere to the new requirements.