The SECURE Act and Your IRA

January’s SECURE Act Brought Sweeping Changes to IRAs

What have been the main changes SECURE has brought to YOUR Precious Metals or Bitcoin IRA?

The Christmas holidays are usually a quiet period in the financial world, so it was a bit of surprise when the SECURE Act was rushed through both houses in record time, while everyone else was getting into the seasonal spirit.

Hammered through the houses in December and live in law by January. So what does the SECURE Act mean for you?

SECURE? Written in all-caps? Must be time for another government acronym.

Indeed, The Setting Every Community Up for Retirement Enhancement Act, was signed into the legal books Friday, December 20 and became effective January 1, 2020.

A dynamic and wide-sweeping change to retirement legislation, the SECURE Act addresses the whole of retirement planning.

There are certainly a lot of new areas to the legislation, but for those of us with Self Directed IRAs or considering a new Gold IRA there are three key changes effective immediately:
 

#1: Required Minimum Distributions (RMDs) Will Begin at 72

Prior to the Act, RMD was reached at the age of 70½, now it’s been put back 18 months to 72.

What this means is starting January 1, 2020 you must begin withdrawing money from your traditional IRA or other tax-deferred retirement accounts such as 401k plans from the age of 72.

For those of us who reached 70½ prior to or during 2019, we must continue making our RMDs for 2019 no later than April 1, 2020. And if you’re currently receiving your RMDs having reached 70½ before January 1, 2020 you should keep taking your distributions as normal.

The new rule only applies to those of us who reached 70½ on or after January 1, 2020 – who may now wait until reaching 72.
 

#2: You Can Continue Contributions to Your IRA AFTER 70½

From the 2020 tax year onward, SECURE means it’s possible to go on adding to a traditional IRA, even after the age of 70½.

As long as you have earned income in the year, you can continue contributing and buying tax-deferred assets and investments like precious metals after the previous cut-off.

Making 2019 (prior year) contributions is not allowed past 70½, using the 2020 law.

This is an excellent opportunity to go on making tax-advantaged investment purchases inside of a Self Directed IRA, long into your retirement if you have the means to do so.
 

#3: Changes to IRA Inheritance Rules Mean No More “Stretch”

Whilst you may be able to continue adding to your account past 70½, previous benefits allowing for passing on tax-advantaged accounts have been reduced.

Following the death of an account holder, any distributions made to non-spouse beneficiaries have to take place within a 10-year limit. Past allowances where inherited accounts could “stretch” their RMDs, sometimes over the lifetime of the new beneficiary to a allow what is effectively a second lifetime of tax-free growth have been removed.

This change does not apply to inherited accounts received prior to January 1, 2020 – and there are exceptions to the stretch rule for spouses, the disabled and new beneficiaries less than 10 years younger than the deceased.

About Tim Schmidt

 
Tim Schmidt is an Entrepreneur who has covered retirement investing since 2012. He's also a published author, and his views on investing have been featured in USA Today, Tech Times, The Huffington Post, Nasdaq, and many more.