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Financial Outsourcing Solutions


FOS Blog

11 Aug

Are you ready for the SECURE Act of 2019?

Are you ready for the SECURE Act of 2019?

The SECURE Act (The Setting Every Community Up for Retirement Enhancement Act) of 2019 will affect most retirement savers, for better or worse.   This act has changed the required age in which you must begin required minimum distributions (RMD) as well as the time period for account distribution upon the death of the individual or plan participant.

The SECURE Act defers to the prior rules if you reached the age of 70½ in 2019, and you must take your first RMD by April 1, 2020. If you reach age 70 ½ in 2020 or after, the new rule takes effect.  With the new rule under the SECURE Act, you must take your first RMD by April 1st of the year after you reach 72.  This allows for an additional 18 months of tax advantages before having to withdraw funds.

Prior to the SECURE Act, non- spousal beneficiaries were, in some cases, allowed to withdraw required minimum distributions over the span of their lives, which could be a few years, or a few decades. The amount of the distribution was calculated based on various factors, including life expectancy and beneficiary age. Now, under the SECURE Act of 2019, non-spouse beneficiaries are required to withdraw the entire balance of the account within 10 years.  There is no required minimum distribution within the 10-year period, but the account balance must be distributed in 10 years.  There are certain circumstances where the 10-year distribution period would not apply, such as in the case of a disabled or chronically ill beneficiary. There are also exceptions in place for minors and beneficiaries who are not more than 10 years younger than the account owner.

As this has taken effect, Management should review notifications and procedures to ensure they are updated properly and ready for the new year.

For additional information contact the author