What Is the SECURE Act?

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.