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S.E.C.U.R.E. Act 2.0 – Will it Happen?


Soon, the year 2020 will be over, but will not be missed by most of us. COVID-19, wild market fluctuations, an unsettled election, a quarantined population, business closures; all will be remembered far longer than we prefer. Yet, there were some positives. Some of 2020’s good news applies to both savers and investors.

From both a business and a personal perspective, two of the highlights were passage of the CARES Act and the SECURE Act. CARES suspended all 2020 Required Minimum Distributions (RMDs) from Qualified Retirement Accounts for the year. SECURE raised the age for RMDs from 70-1/2 to 72. Both made other beneficial changes as well.

As 2020 winds down, Congress is considering revisions to the SECURE Act. The revisions have been dubbed SECURE Act 2.0. A summary of the original SECURE Act (we call it 1.0) and the proposed changes (2.0) include:

•    (1.0) Repealed Age Limits for Traditional IRA Contributions. Many Americans today are working beyond the age of 70-1/2, and those workers were formerly not able to make Traditional IRA contributions. (1.0) enabled contributions from working people after age 70-1/2. (2.0) No change.

•    (1.0) Raised Required Minimum Distribution (RMD) Age. Owners of Traditional IRAs and other tax-qualified retirement accounts were formerly mandated to begin taking taxable withdrawals at age 70-1/2, but (1.0) postponed beginning mandatory withdrawals until age 72. This affects anyone who was born after June 30, 1949. (2.0) Further elevates the RMD age to 75, affecting the same population.

•    (1.0) Repealed and replaced “Stretch IRAs” for beneficiaries. For owners’ deaths after 2019, beneficiaries are no longer be able to take annual RMDs based on their own life expectancy. Instead, (1.0) requires the entire Inherited Account to be emptied in 10 years, with no annual requirement. (2.0) No change.

•    (1.0) Proposed smaller RMDs for all. IRS agreed to update Life Expectancy tables to reflect our increasing lifespans. This would keep more money in Retirement Accounts for a longer period. Unfortunately, the tables were released too late in 2020 to take effect in 2021. (2.0) No changes proposed at this time, but the new RMD tables take effect for RMDs in 2022 (except for 2021 RMDs delayed until early 2022, which must use the old tables).

Our Federal Government claims to be in favor of the citizenry providing for themselves later in life. Financial behavior is easily influenced by the U.S. Tax Code. CARES and SECURE (1.0) made a large difference in taxation and self-reliance. We applaud the passage of both, and strongly support passage of SECURE Act (2.0). Follow this Blog, and we will report progress as it happens.

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