While most of us were enjoying the holidays, our friends in Washington were busy tinkering with traditional Individual Retirement Accounts (IRAs).
As you may have heard, Congress passed legislation late last year that changed the rules for traditional IRAs and other defined contribution plans. Over the years, there have been many changes to the tax laws affecting retirement, and this one is no different. These changes went into effect on January 1, 2020.
If you reach age 70½ in 2020, you can delay taking your first required minimum distribution (RMD) on your traditional IRAs until April 1 of the year after you turn 72. If you turned 70½ in 2019, you will still be required to take your first RMD by April 1, 2020. This may not sound like a big deal, but I can assure you, keeping your money in a tax-deferred account for another 18 months may alter some of the retirement income projections you have created.
Another change that came with the SECURE Act is that you can continue contributing to your Traditional IRA past age 70½. There’s no requirement to stop contributing as long as you meet the earned income requirement.
Of course, every situation is unique and may warrant some adjustments. I would encourage you to discuss your IRA and any questions you have with a qualified, experienced financial advisor.
Information in this material is for general information only and not intended as investment, tax or legal advice. Please consult the appropriate professionals for specific information regarding your individual situation prior to making any financial decision.
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