The SECURE Act & How It Affects Retirement Savings

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The SECURE Act & How It Affects Retirement Savings

The Setting Every Community Up for Retirement Enhancement (SECURE) Act is being described by many as the most important change to retirement legislation in decades. It is important to understand how you might be affected by this change in retirement legislature. This article will touch on some of the major changes that people should expect if the SECURE Act is signed into law.

Removal of Stretch Provisions on Inherited IRA's

Currently, non-spouse IRA beneficiaries are allowed to continue taking or “stretching” their inherited IRA required distributions throughout their lifetime. This is a powerful estate planning method that many IRA owners have utilized to transfer wealth to their beneficiaries. Under the SECURE Act, beneficiaries would be required to distribute all of the assets out of their inherited IRA within ten years. This will cause beneficiaries to have to take larger distributions as income, which could put them in a higher tax bracket. This could greatly affect the estate planning many families have done.

Repeal Maximum Age for Traditional IRA Contributions

The SECURE Act will remove the rule that does not allow traditional IRA contributions after the age of 70½. As Americans live longer, many will continue working after age 70½.

Extend the Start Date for Required Distributions

Under the SECURE Act, participants will be able to delay their required minimum distributions until they are 72 years old, extended from age 70½ under current legislation.

401(k) Lifetime Income Provisions

The SECURE Act would give fiduciary safe harbor to employers when they choose a group annuity issuer to support lifetime income options for participants in their 401(k) plan. Plan sponsors have been hesitant to offer annuities as investment options in their retirement savings because of their fiduciary liability. By providing a safe harbor for plan sponsors, this legislation is opening the door for annuity products to be added to the investment options participants have access to. Participants should be diligent when evaluating their options because of the complexity of annuity contracts. These contracts are difficult to understand and often include high fees. Participants should consult a financial professional to fully understand their investments.

About the Author

Matthew Lenhardt is a Financial Planner with Insignia Financial Company. He focuses on assisting members of the automotive industry with their retirement savings decisions and helps to guide them to a successful financial future for them and their family.  He is currently accepting new clients. To schedule a consultation, call 734-464-0935 or email

Securities and investment advisory services offered through Royal Alliance Associates, Inc. (RAA), member FINRA/SIPC. RAA is separately owned and other entities and/or marketing names, products or services referenced here are independent of RAA. RAA does not provide tax or legal advice. 17199 N. Laurel Park Drive, Suite 300, Livonia, MI 48152. 734-464-0935. 1972549-20191223