SECURE Act – 2 Minute Summary
The SECURE Act was signed into law in December 2019. Here are the 2 primary changes which took effect on January 1st, 2020:
- If you inherit an IRA in 2020 or later, the entire account balance must be withdrawn within 10 years. Previously, you could stretch out withdrawals over many more years or even decades. Why does this matter? IRA withdrawals are treated as taxable income. This will trigger tax payments much earlier than planned for.
- If you were born on or after July 1, 1949, you are no longer required to make minimum withdrawals (RMDs) from your IRA until the year you turn 72. Previously, RMDs had to begin the year you turn 70.5, which is still in effect for those born before July 1, 1949 (since RMDs already began in 2019).