Are You Ready for the Second Act of the Secure Act?
Some potential benefits of the Securing a Strong Retirement Act.
Provided by Andrew Hoskins
Recently, you may have seen headlines regarding the Securing a Strong Retirement Act, also referred to as the second version of the SECURE Act, or SECURE Act 2.0.
As the bill moves from the House of Representatives to the Senate, many hopeful investors are anticipating further retirement support as the majority of the bill stems from the original SECURE Act of 2019. However, it’s worth noting that the bill may change drastically before being signed into law. With that in mind, here are some potential benefits of the Securing a Strong Retirement Act.
Required Minimum Distributions (RMD): For those who contribute to a 401(k) or IRA, the Securing a Strong Retirement Act may allow you to wait until age 74 to start taking RMDs from your retirement accounts.1
Catch-up Contributions: Those who own an IRA and are over age 60 may be allowed to contribute an additional $10,000 per year to their retirement accounts.1
Student Loans: Employers may be allowed to match retirement contributions for employees who are paying off student loans.1
There’s little doubt the bill will benefit many retirees or those approaching retirement; the only question that remains is “how.” If you have any questions about how this new legislation may impact your retirement strategy, or you just want to chat, give me a call anytime. We’re always here to help.
Andrew Hoskins may be reached at 703-997-9605 or [email protected]
This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.
Under the SECURE Act, once you reach age 72, you must begin taking required minimum distributions from a Traditional Individual Retirement Account in most circumstances. Withdrawals from Traditional IRAs are taxed as ordinary income and, if taken before age 59½, may be subject to a 10% federal income tax penalty. You may continue to contribute to a Traditional IRA past age 70½ under the SECURE Act. Contributions to a Traditional IRA may be fully or partially deductible, depending on your adjusted gross income.
Additionally, you must also begin taking required minimum distributions from your 401(k) or other defined-contribution plans in most circumstances at age 72. Withdrawals from your 401(k) or other defined-contribution plans are taxed as ordinary income and, if taken before age 59½, may be subject to a 10% federal income tax penalty.
- Congress.gov, May 5, 2021