How the SECURE Act May Affect Individuals & Families

Person signing paper into legislation

The “Setting Every Community Up for Retirement Enhancement” Act of 2019, better known as the SECURE Act, was approved by the Senate on December 19, 2019, and signed into law on December 20 by President Donald Trump. The new law includes many reforms that will impact everyone from young families to retirees. Here are 5 ways the SECURE Act may affect you:

Required Minimum Distributions Now Begin at Age 72

The starting age for required minimum distributions (RMDs) has moved from age 70 ½ to age 72. This allows you to defer taxes on those withdrawals for a few more years. You should note that if you turned 70 ½ in 2019 or before and have already taken your RMD in 2019, you’re required to continue taking it in 2020 and subsequent years.

No Age Restrictions on IRA Contributions

Beginning in 2020, if you are age 70 ½ or older with earned income, you can contribute to an IRA. So no matter what your age, you can make a contribution to a traditional IRA as long as you have earned income. In 2020, you can contribute up to $6,000 to an IRA – $7,000 if you are age 50+.

“Stretch” IRAs Eliminated

One of the biggest impacts of the SECURE Act is the elimination of the “stretch” provision for most (but not all) non-spouse beneficiaries of inherited IRAs. If you are a non-spouse who inherited an IRA prior to January 1, 2020, you can “stretch-out” your required minimum distributions over your lifetime.

Under the SECURE Act, most non-spouse inherited IRAs and Roth IRAs must be distributed within 10 years. Distributions are not required every year, but the account must be completely distributed by the end of the tenth year.

529 Plan Qualified Education Expenses Expanded

You now have the ability to distribute $10,000 from a 529 plan to pay the principal and interest of a qualified education loan for the plan’s beneficiary or his/her sibling. Another change: Apprenticeship programs that are registered and certified with the Department of Labor now qualify as higher education expenses. 529 plan funds can be used for fees, books, supplies, and required equipment.

Increased Penalty Fee for Failing to File Federal Returns

The Secure Act increases the penalty for failure to file affected federal tax returns to the lesser of: (1) $400 or (2) 100% of the amount of tax due. The change applies to returns that are due in 2020 and beyond.



The SECURE Act contains some big changes to our current retirement system including the age adjustment of required minimum distributions and the elimination of the stretch provision with the 10-year rule. Check with your advisor to see how these changes might affect you in the new year.