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The ProVise Advisor Team
THE SECURE ACT AND WHAT IT MEANS FOR YOU
The recently enacted Setting Every Community Up for
Retirement Enhancement Act is arguably the broadest piece
of retirement legislation passed in over a decade. The sweeping
changes contain positive provisions for savers but eliminate
planning options available to their heirs.
The new law primarily focuses on two areas of retirement
planning: Required Minimum Distributions (RMDs) and
expanding retirement plan availability. The most significant of
the changes are described in more detail below:
• Required Minimum Distributions (RMDs) moved to
age 72: Before the SECURE Act, Americans turning 70 ½
were required to withdraw a minimum amount from their
qualified retirement accounts every year based on their age
and the value of their account. Now, for those who turn
70 ½ in 2020 or later, RMDs are no longer required until
age 72, giving another year and a half of potential taxdeferred
growth. Although the RMD age has moved to age
72, individuals that give directly from their IRA to charity
using Qualified Charitable Distributions (QCDs) are still
able to do so beginning at age 70 ½.
• No age limitation to contribute to an IRA: Closely related to
the increase in RMD age, contributing to an IRA at age 70 ½
and older is no longer prohibited. As long as someone earns
income through work, he or she is eligible to contribute to
an IRA at any age.
• Elimination of the “Stretch” IRA for certain beneficiaries:
Before this change, if children or grandchildren inherited
an IRA, they were able to take a Required Minimum
Distribution (RMD) each year from the account based on
their ages. As the heirs were likely younger than the original
owner, the account could extend over a much longer period
than originally anticipated, all the while allowing the heirs
to benefit from tax-deferred growth. Under the new law,
for IRA owners dying in 2020 or later, most non-spouse
beneficiaries will be required to empty the inherited IRA in
10 years or less, potentially causing the beneficiary to rise into
higher tax brackets in the event of a large IRA inheritance.
About ProVise Management Group, LLC: ProVise is a financial planning and investment management firm registered with the Securities and Exchange
Commission (SEC) and has been in business since 1986. Our 15 professional advisors serve approximately 1100 clients in over 30 states. As of 12/31/19 we
were managing approximately $1.5 billion for our individual, corporate, not-for-profit and 401k retirement plans. Please visit our website at: provise.com.
Investment Advisory Services offered through ProVise Management Group, LLC. The information herein is general and educational in nature and should
not be considered legal or tax advice. Tax laws and regulations are complex and are subject to change.
90 TAMPA BAY MAGAZINE | MARCH/APRIL 2020
• Reduced barriers to Multiple Employer Retirement Plans
(MEPs): MEPs allow small businesses to come together to
start a retirement plan, using economies of scale to lower
costs. Historically small businesses needed commonalities
to come together to start these plans such as belonging to
the same trade association and being in the same geographic
area. Enrollment in MEPs was limited, however, since
compliance was based on all firms following the rules.
If one business under the combined plan violated the rules,
the entire plan could be disqualified and all members
negatively impacted. A combination of the SECURE Act
and legislation passed earlier in 2019 eliminated the
commonalities requirement and in the event one employer
breaks the rules, that one noncompliant business has its
portion of the plan disqualified, but the “master” plan itself
and the other employers are not impacted.
While these changes were the most substantial, several
others were noteworthy such as: using up to $10,000 from
529 savings plans to pay down student debt; tax credits to small
businesses for starting a retirement plan and auto enrolling
employees; up to $5,000 in penalty-free distributions from
retirement plans for new child or adoption costs and allowing
some part-time workers to be eligible for workplace retirement
plans. However, even adding these other changes does not
exhaust the full list of items contained as part of the 1,773-page
spending bill, so reviewing the new laws with your trusted
estate, tax and financial advisors is recommended.
There are lots of planning opportunities around each of these
changes. If you are someone without an advisor or without a
financial plan, we cannot think of a better time, as we begin
a new decade, to sit down with a CERTIFIED FINANCIAL
PLANNER™ Professional who not only puts your goals frontand
center, but also assists in adapting to life’s obstacles and, as
in this case, new Federal laws. Please call to take advantage of a
complimentary one-hour consultation in either our Clearwater
or Tampa office.