The law has implications for retirement savings and taxes for workers and retirees.
The Setting Every Community Up for Retirement Enhancement (SECURE) Act was passed in December 2019 and became a law as of Jan. 1, 2020. The legislation created changes for long-term retirement savings and has financial impacts for Americans at every age.
What is the secure act?
The SECURE Act changed a variety of retirement account rules, including who is eligible to contribute to retirement accounts and when withdrawals are required. The new legislation also adds a new exception to the early withdrawal penalty.
Important retirement account changes from the SECURE Act include:
- The required minimum distribution age increases to 72, up from 70 1/2.
- The age limit for IRA contributions has been removed.
- Inherited retirement account distributions must be taken within 10 years.
- New parents can take penalty-free withdrawals.
- Long-term part-time employees may now be eligible for 401(k) plans.
Here’s an in-depth look at the SECURE Act and how it may affect you.