Life illuminated
Link to FireFly CU Pinterest page
Link to FireFly CU LinkedIn page
Link to FireFly CU print this page
Link to FireFly CU share via SMS
Mar 06, 2020

The Top Three Ways the SECURE Act May Impact Your Retirement Plans

Placeholder div for background image

Whether you are counting down days until retirement or still have years to go, the Setting Every Community Up for Retirement Enhancement (SECURE) Act, which was signed into law in late 2019, has likely made an impact on your retirement plans. While the Act introduced a number of changes affecting retirement accounts, these four key takeaways from the Act can help you determine what questions to ask your financial advisor to ensure your retirement planning efforts still meet your needs and goals:
New Rules for Some Beneficiaries Receiving Inherited Funds
Probably the most significant change coming from the Act is the elimination of the life expectancy distribution option for most non-spouse beneficiaries. For Individual Retirement Account (IRA) and employer plan owners who pass away in 2020 and beyond, this means beneficiaries will be required to liquidate the account by the end of the 10th year following the year of death.
However, certain individuals called “eligible designated beneficiaries” will be allowed to follow the old rules:

  • Spouses
  • Beneficiaries less than 10 years younger than the decedent
  • Chronically ill or disabled individuals
  • Certain Minors (ask your financial advisor for details)
For IRA and employer plan owners who died in 2019 or before, beneficiaries can continue using the old life expectancy rules. For grandfathered accounts and for eligible designated beneficiaries, two sets of beneficiary rules now apply.
The Age to Begin Required Retirement Plan Withdrawals Has Increased
To account for the increasing longevity of retirees, the Required Minimum Distribution (RMD) age will now begin at 72 rather than 70 ½. This new rule is effective immediately; anyone turning 70 ½ in 2020 will not be required to take a distribution until the year they reach age 72.
Those who turned 70 ½ in 2019 must follow the old rules and will still be required to take an RMD in 2020; they are not allowed to defer their RMDs to age 72.
Age Limits Have Been Removed for Traditional IRA Contributions
Previously, an individual could not contribute to a Traditional IRA once they reached age 70 ½. They could, however, contribute to a Roth IRA if they or a spouse had earned income. The SECURE Act removes the age restriction for Traditional IRAs, so now anyone at any age can contribute if they or a spouse are still working.
Additional items
There are many other provisions of the SECURE Act that could influence how you can use retirement funds and how you can save for your future. If any of the following situations apply to you, ask your financial advisor for more details:
  • Those expecting or in the process of adopting
  • Parents looking to assist a beneficiary with student loans
  • Small business owners
  • Part-time workers
Now that you have learned a bit about the SECURE Act, here are some great action steps you can discuss with your financial advisor to ensure you are making the most out of your retirement plan:
  • Review your beneficiary designations to ensure they are accurate and still align with your intended goals
  • Assess if a conversion to a Roth IRA could help accomplish your wishes for passing on inherited funds to beneficiaries

While the general rules seem simple enough, it is the finer details that individuals often get stuck. Feel free to reach out to the Firefly CU Advisors team with any questions you have regarding the SECURE Act and how it affects the retirement planning you are doing or any other questions you may have regarding your retirement planning, investments, or insurance needs. To schedule an appointment, call (952) 736-5085.
Securities sold, advisory services offered through CUNA Brokerage Services, Inc. (CBSI), member FINRA/SIPC, a registered broker/dealer and investment advisor. CBSI is under contract with the financial institution to make securities available to members. Not NCUA/NCUSIF/FDIC insured, May Lose Value, No Financial Institution Guarantee. Not a deposit of any financial institution. CUNA Brokerage Services, Inc., is a registered broker/dealer in all fifty states of the United States of America.
The Representative is neither a tax advisor nor attorney. For Information regarding your specific tax situation, please consult a tax professional. For legal questions, including information about estate planning, please consult your attorney. FR-2971434.1-0220-0322

Contents of this blog article are intended to provide you with a general understanding of the subject matter. However, it is not intended to provide legal, accounting, or other professional advice and should not be relied on as such. Information may have changed since the publication date.

Want to learn more about planning for retirement?

Blog post currently doesn't have any comments.


Firefly is not just another credit union in Minnesota. We guide our members forward throughout all life stages, help make their financial lives healthier, and help them achieve their goals with customized solutions.
Get started online or visit a Twin Cities area branch.

Learn More