Delco re:View Winter 2020 - 15

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The Secure Act
T

Tips and Opportunities

he Setting Every Community Up for Retirement
Enhancement (SECURE) Act was signed into law
December 20, 2019. The legislation will have an impact
on retirement plan savings and distribution strategies, 529
Plans and even trusts. The effects of this new legislation will
significantly impact millions of retirement account owners and
their beneficiaries.
The SECURE ACT increases Required Minimum
Distribution (RMDs) Age from 70 ½ to age 72. Anyone
currently taking distributions must continue but those attaining
age 70 ½ in 2020 can now push distributions till age 72 yrs. In
fact, as with previous distribution rules, they can wait till April
15th of the year following their 72nd birthday. The SECURE
Act legislations allows investors to delay a little longer this tax
deferral.
The SECURE Act allows contributions to an IRA to
continue even past age 70 1/2 yrs. Typically these distributions
ended once clients were eligible for RMDs. This will allow
clients to continue to reduce taxable income as long as they have
earned income.
This gives rise to some planning nuances. First, does it make
sense to contribute pre-tax dollars, thus increasing the RMD at
age 72 yrs? Do I take the tax break now for increased taxable
income later? It certainly gives rise to an interesting Back
Door Roth strategy. For investors above the income limitations
for Roth IRA contributions, this could potentially allow for
non-deductible contributions to an IRA and the immediate
conversion to a Roth
One of the most impactful measures of the new legislation
is the end of the "Stretch IRA" for most beneficiaries. The
SECURE Act did create five new classes of 'eligible designated
beneficiaries' (EDBs) who are exempt from the 10-year payout
rule. However, this is a dramatic change for beneficiaries,
including trusts, of IRA and retirement plan owners who pass in
2020 and beyond.

Keep in mind, the Stretch IRA is not (was not) an investment
product but instead an investment strategy. It allowed an
investor, as an owner of a qualified account (401k, 403B, IRA),
to have their assets "stretched" over multiple generations. This
was achieved by naming beneficiaries that could take RMDs
(Required Minimum Distributions) over their lifetimes based on
the life expectancy of each individual. Beneficiaries / trusts must
now distribute these funds over a 10-year period.
These are just a few points on the new SECURE Act
legislation. It also affects 529 Plan eligible distributions,
investment options and eligibility requirements within
Retirement plans. It is certainly a good time to review your
savings, distributions and estate strategy with your trusted
financial advisor. *
Submitted by Brendan
McPoyle, CFP®, of
Princeton Global, a
boutique investment
advisory firm that provides
asset management for
institutional clients, families,
and small businesses.
As a Partner and Wealth
Manager, I assist clients
throughout the Tri-State
area while focusing on
expanding our brand in my
home locale of Delaware
County. Call to schedule
your financial review today:
1-302-268-6413
Securities offered through MerCap Securities, LLC,
Member FINRA/SIPC and wholly-owned subsidiary of
MerCap Enterprises, Inc. Address:  73 Chestnut Road, Suite
400, Paoli, PA 19301  Phone: (877) 784-8021. MerCap
Securities, LLC is not affiliated with Princeton Global Asset
Management, LLC.
Winter 2020

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