Did you know you can sell all or a portion of a life insurance policy, even term insurance?
(4 minute read)
On December 20, 2019, Congress signed the Setting Every Community Up for Retirement Enhancement (SECURE) Act into law. Considered to be long overdue, this act includes reforms intended to make retirement more accessible and easier for many Americans. Retirees and those approaching retirement should pay close attention to the changes made in 401(k)s, pension plans, and individual retirement accounts (IRAs). To get a better understanding of what updates and alterations have been made, let’s recap the biggest points of the SECURE Act.
SECURE Act Changes to Required Minimum Distributions
With Americans working longer than before, the SECURE Act creates provisions that protect the increasing retirement age. One of the biggest changes is that Americans no longer make withdrawals, also known as required minimum distributions, from IRAs or 401(k)s at 70 ½ years old. The new age is 72, and this applies to any individual who will turn 70 ½ in the 2020 calendar year. If you turned 70 ½ in 2019, be sure to speak with your financial advisor to find out if you should still be taking these withdrawals.
SECURE Act Changes to 401(k) Plans
Long-term part-time workers are now able to join their company’s 401(k) plans. This is helpful to senior citizens, as 40% of workers 65 years or older do so on a part-time basis. With the SECURE Act, those who work 1,000 hours a year, or who worked 500 hours in three consecutive years, must be offered the chance to join in their employer’s 401(k) retirement plan.
SECURE Act Changes to IRAs
There are several changes to IRAs thanks to the SECURE Act that will impact older Americans. The first is that ability to make contributions to IRAs past the usual 70½ year cutoff, meaning traditional IRAs will align more closely with Roth IRAs and 401(k) plans. The second is that inherited IRA distributions must be taken now within 10 years. Prior to the SECURE Act, it was possible to “stretch” distributions over a single life expectancy, creating a reliable income stream. However, there are exceptions to this rule, including assets left to a surviving spouse or a disabled/chronically ill beneficiary.
The SECURE Act Could Majorly Impact Your Retirement Savings
The changes put forth by the SECURE Act have great implications for all Americans planning their retirement. However, many of these alterations provide positive benefits for those who are either retired or reaching their retirement ages. If you’re unsure about how these legislative updates could impact your retirement planning, be sure to sit down with a financial or retirement advisor to review your assets, your plan, and your future.
Did you know you can sell all or a portion of a life insurance policy, even term insurance? Selling an unwanted life insurance policy is no different than selling your car, home or any other valuable asset that will create immediate cash. Contact us today to learn more.
Life Settlement Advisors