On December 20, 2019, President Trump signed the Setting Every Community Up for Retirement Enhancement Act (SECURE Act). The SECURE Act came into effect on January 1, 2020. The Act is the most impactful legislation affecting retirement accounts in decades. The SECURE Act has several positive changes: It increases the required beginning date (RBD) for required minimum distributions (RMDs) from your individual retirement accounts from 70 ½ to 72 years of age, and it eliminates the age restriction for contributions to qualified retirement accounts. However, the most significant change affects the beneficiaries of your retirement accounts: The SECURE Act requires most designated beneficiaries to withdraw the entire balance of an inherited retirement account within ten years of the account owner’s death. Under the old law, beneficiaries of inherited retirement accounts could take distributions over their individual life expectancy. This was a wonderful benefit, as the retirement account could grow tax free, yet provide income in the form of Required Minimum Distributions for life of the beneficiary. However, under the SECURE Act, the shorter ten-year time frame for taking distributions will result in the acceleration of income tax due, possibly causing your beneficiaries to be bumped into a higher income tax bracket, thus receiving less of the funds contained in the retirement account than you may have originally anticipated. The SECURE Act does provide a few exceptions to this new mandatory ten-year withdrawal rule: spouses, beneficiaries who are not more than ten years younger than the account owner, the account owner’s children who have not reached the “age of majority,” disabled individuals, and chronically ill individuals. However, proper analysis of your estate planning goals and planning for your intended beneficiaries’ circumstances are imperative to ensure your goals are accomplished and your beneficiaries are properly planned for. Your estate planning goals likely include more than just tax considerations. You might be concerned with protecting a beneficiary’s inheritance from their creditors, future lawsuits, and a divorcing spouse. In order to protect your hard-earned retirement account and the ones you love, it important to review your Estate Plan and ensure your wishes are in proper legal form. Review Intended Beneficiaries With the changes to the laws surrounding retirement accounts, now is a great time to review and confirm your retirement account information. Whichever estate planning strategy is appropriate for you, it is important that your beneficiary designation is filled out correctly. The beneficiary form should NOT be blank, and the beneficiary should NOT be the “Estate of the Deceased”. If your intention is for the retirement account to go into a trust for a beneficiary, the trust must be properly named as the primary beneficiary. If you want the primary beneficiary to be an individual, he or she must be named. Ensure you have listed contingent beneficiaries as well. Understand the mandatory 10 year payout rule under the new SECURE Act, and if it will present a tax problem for your beneficiaries. If it does, alternative planning is critical (such as potential ROTH conversions). If you have recently divorced or married, you will need to ensure the appropriate changes are made. Remember, changes cannot be made after your death, or if you become incapacitated. Our office is ready to be of assistance, and help review your estate plan and assets to ensure the most tax efficient strategies are used.