Taxes on Your Mind?

Good News, Bad News for Your Retirement Accounts: The SECURE Act

If you own a retirement account, you could experience good or bad news in the year ahead due to the recent passage of the “SECURE Act.”

Good News
If you have not yet been required to begin distributions from your retirement account(s) (the minimum amount you must withdraw from your account each year), you are now permitted to wait until you reach the age of 72, providing you were born on or after July 1, 1949. Assuming you do not need the income, this is good news because it means you can delay paying taxes until a later age and your account can stay fully invested for your benefit.

Bad News
On the other hand, we had to share the following less-than-desirable news with clients just last week: “Unless your beneficiary is a spouse—and your contingent beneficiaries are most likely not—they are no longer permitted to keep the account they inherit from you for their lifetimes. Instead, non-spouse beneficiaries must now fully distribute their inherited retirement account(s) within 10-years.”

If you are like many others affected by the SECURE Act, the tax consequences of this new rule will result in your legacy providing a large gift to the government in the form of taxes, and a similarly reduced gift to your beneficiaries. While this can be frustrating, it does offer the opportunity to revisit the planning you did when selecting your beneficiary designations.

Let Us Help
If you think you may be affected by the SECURE Act, and would like to reconsider how to maximize your legacy, contact us today to discuss new beneficiary planning opportunities.