By Tim Kingsbury

The December 2019 passage of the SECURE Act may feel like ancient history, but its effects resonate within a few key financial planning issues relevant to investors today. In this blog we will highlight some of the major changes between year-end retirement and financial planning issues.

Return of Required Minimum Distributions in 2021

The CARES Act of March 2020 created a Required Minimum Distribution (RMD) holiday in 2020 due to the pandemic. However, required minimum distributions from retirement accounts have returned in 2021.

Required Minimum Distributions from Retirement Plans Raised to Age 72

For those born after July 1, 1949, the first RMD must be taken by April 1, 2022. If you are born before that date, you should have commenced taking RMDs in the year 2019 or prior.

Qualified Charitable Distributions (QCDs) Remain an Alternative to RMDs

Sending all or a part of your required minimum distribution directly to charity not only fulfills the requirement but is also a non-taxable distribution. Charitably inclined clients should evaluate the tax benefits of sending a QCD to charity versus gifting appreciated securities to charity. Must be 70.5 years or older to perform a QCD.

End of Stretch IRA for Non-Spouse Beneficiaries

In most cases, non-spouse Beneficiaries inheriting a pre-tax retirement account after January 1, 2020 are now required to distribute the entire account balance by the tenth year after receiving the inheritance. Prior to January 1, 2020 a non-spouse beneficiary inheriting a retirement account was able to stretch the required minimum distributions throughout their own life expectancy. Reviewing assets and the tax impact on beneficiaries is even more important with this change.

Age Limit Removed for IRA Contributions

Though the age limit has been removed for IRA contributions, keep in mind that earned income is necessary and deductible contributions remain subject to adjusted gross income limits.

More Changes to Come

The SECURE Act made large changes to the retirement and financial planning landscape, but will likely not be the last piece of legislation to digest. SECURE Act 2.0 is currently being reviewed by Congress. Veris Wealth Partners will continue to monitor and report on subsequent developments.

Tim Kingsbury is an Advisor and CERTIFIED FINANCIAL PLANNER™ professional. He is located in the New York office of Veris Wealth Partners and is focused on helping clients meet their financial and impact goals.

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The information contained herein is provided for informational purposes only, represents only a summary of topics discussed, is subject to change without notice, and does not represent personalized investment advice, or an offer to sell or the solicitation of any offer to buy any securities.  Rather, the contents including, without limitation, any forecasts and projections,  simply reflect the opinions and views of the authors.  All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change without notice.