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By Sarah Ruef-Lindquist, JD, CTFA

Sarah Ruef-Lindquist, JD, CTFA

Sarah Ruef-Lindquist, JD, CTFA

Earlier this month, we shared how with January 1, 2020 came a host of changes in how retirement planning will be done in light of the new law affecting retirement plans known as the SECURE Act (Setting Every Community Up for Retirement Enhancement Act of 2019) signed into law in late 2019.

There are a few more aspects to this law that impact how people save for and draw from their retirement plans.

Good News for charities: 70 ½ is still the age to be eligible to make Qualified Charitable Distributions, even though Required Minimum Distribution age is now 72.

One of the most significant changes is that the age when someone must begin taking funds out of a 401(k) or IRA has moved from 70 ½ to 72; For many years, people who turned 70 ½ have to begin withdrawing distributions (Required Minimum Distributions, or “RMD’s”0 (and paying related income taxes) by April 1 of the following year or suffer a hefty penalty of 50% of the amount of the distribution; Now, the age is 72.

70 ½ is still the age at which one becomes eligible to make direct charitable gifts to charity (up to $100,000 total charitable gifts each year) and not have the gift amount included in taxable income. That’s great news for charity and for non-itemizers who are able to take advantage of this tax-efficient means of charitable giving.

Saving for retirement is ageless: No age limit on contributing to IRA

Anyone with earned income for the year may now make contributions to an IRA. Previous to the SECURE Act, age 70 ½ was the cut off and anyone older than that could not make contributions. Now even those beyond 70 ½ can continue to contribute to their IRA as long as they have earned income equal to or greater than the amount they want to contribute, up to $7,000 for 2020.

We will be hearing more about this new provision of the law affecting retirement plans as we enter 2020 and the new decade. Be sure to check with your financial advisor about how any of this may affect your particular situation.