There are some important changes related to the tax laws of the retirement plan. There was a new law signed called SECURE Act which has brought some changes. I have read and chosen a few to share with you here:
- No more age limit on traditional IRA Contributions : the prior rule used to stop you from making contributions to traditional IRA if you are 70.5 years old or older. Now, with this new act, you are allowed to keep making a contribution to a traditional IRA after you reach 70.5 years old.
- The Required Minimum Distributions (RMD) is applicable to taxpayers who turn 70.5 years old during the year. Now the Act has changed to age 72. This change is only for those reaching 70.5 years old after December 31, 2019, though.
- RMD on inherited accounts: if you receive an inherited retirement account, you used to allow to spread out the distribution requirement over many years. Upon you distribute the money from the inherited retirement plan account, you need to pay tax on it. That’s why your intention is to defer as much as possible. However, the new Act requires you to distribute in 10 years.
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