Your IRA and the Secure Act of 2020

Starting January 1, 2020 you must start taking Required Minimum Distributions (RMD's) from traditional IRA's and employer tax deferred accounts like 401(k)'s, 403(b)'s and 457 plans at age 72 which is a change from age 70 1/2. However, if you turned 70 1/2 in 2019 then you are required to continue those distributions. So, only those who turn 70 1/2 on or after 2020 can now wait to take RMD's until age 72.

Contributions have also been changed with the Secure Act. Now, you can continue to contribute to your IRA in the year you're 70 1/2 and beyond along as you have earned income and there is not an age cap on these contributions.

 The ability to "stretch" an inherited non-spousal IRA is no longer available as there is a 10 year mandatory period to take take the distributions and pay the taxes.

Additionally, there is also a penalty free withdrawal for birth and adoption expenses up to $5,000. So, theoretically a couple could withdraw $10,000 penalty free from the retirement accounts.

For additional details from Fidelity click on this link:

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John R. Kinkead

Vice President of Wealth Advisement