How Will the SECURE Act Affect Your Plan?

April 23, 2020 | Zach Dalluge

Zach Dalluge, Associate Advisor, Foster Group

On January 1st, 2020, the Setting Every Community Up for Retirement (SECURE) Act went into effect. The bill passed Congress with wide bipartisan support, and, despite a long wait for the Senate to take it up in 2019, it was passed and signed into law by the president at the end of December.

The bill made several significant changes for retirement plans and investors. Here are some of the most notable changes:

  • Required Minimum Distributions (RMD) now begin at age 72 for anyone that turns 70.5 after December 31, 2019. For anyone that turned 70.5 prior to January 1, 2020, the old rules still apply.
  • Inherited IRAs will no longer have a required minimum distribution but will be required to be fully liquidated in a 10-year window. This will only apply to beneficiary IRAs that were inherited after December 31, 2019. For any inherited dollars prior to January 1, 2020, the old rules still apply. There is also an exception for surviving spouses, minor children, disabled individuals, chronically ill individuals and an individual who is not more than 10 years younger than the IRA owner.
  • While the RMD age moved from 70.5 to 72, the qualified charitable distribution (QCD) age has not changed. Individuals who turn 70.5 are still able to give pre-tax dollars from their IRA up to $100,000 per year to qualified non-profits, even if they are not yet taking an RMD.
  • The age limit for traditional IRA contributions has been removed. This opens the door to new planning tools, such as backdoor Roth contributions after age 70.
  • Allows for a penalty-free $5,000 401(k) or IRA distribution for childbirth or adoption expenses.
  • Allows up to $10,000 of 529 plan dollars to be used to repay student loans.
  • For 401(k) plan sponsors and participants, the bill expands access to small employers to set up multi-employer 401(k) plans, lessens the risk on employers offering annuity options inside a 401(k) and expands access for part-time workers.

As always, you’ll want to review your investment options and tools available within your 401(k) to ensure they are aligned with your plan.

If you have any questions about how the SECURE Act will affect you, please contact Foster Group.

Foster Group, Inc. is not engaged in the practice of law or accounting. The content of this article should not be construed as legal or tax advice. Always consult an attorney or tax professional regarding your specific legal or tax situation. PLEASE NOTE LIMITATIONS: Please see Important Disclosure Information and the limitations of any ranking/recognitions, at A copy of our current written disclosure statement as set forth on Part 2A of Form ADV is available at ©2020 Foster Group, Inc. All Rights Reserved.