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The SECURE Act in Morris County, New Jersey

Through the years, clients have come to E.A. Goodman Law, LLC for their retirement and estate planning needs. For individuals with Individual Retirement Accounts (IRAs), establishing an IRA trust has been a means of providing trust beneficiaries with a source of income. However, the recently enacted SECURE Act includes provisions that impact beneficiary distributions.

If you have an IRA, plan to leave an IRA to a loved one or are the beneficiary of an IRA trust, you need the informed representation that our experienced estate planning lawyers provide. We have a working knowledge of the SECURE Act and the New Jersey and federal laws that apply to trusts and estates. When you consult with us, we will assess your retirement and estate planning options and devise a strategy that protects you, your assets and your loved ones.

What is the SECURE Act?

The “SECURE Act” (Setting Every Community Up for Retirement Act) was passed by the U.S. Congress in 2019 as part of a comprehensive budget measure. The SECURE Act went into effect on Jan. 1, 2020 and affects not only IRAs, but defined contribution plans (e.g. 401(k)s) and defined pension benefit plans as well. In short, the SECURE Act:

  • Repeals the maximum age (currently 70 ½) for IRA contributions
  • Increases the minimum distribution age for retirement accounts from 70 ½ to 72
  • Permits part-time workers to enroll in 401(k) plans

The SECURE Act is designed to make saving for retirement easier and also acknowledges that people are living longer and working past the traditional retirement age. 

Although required minimum distributions (RMDs) for IRA holders now begin at age 72 this year,  individuals who turned 70 ½ in 2019 and are already taking distributions can continue doing so.

In addition, the SECURE Act allows more part-time workers eligible to enroll in employer- sponsored 401(k) plans. Employers are required to open 401(k)s to employees who work more than 1,000 hours per year, or 500 hours over 3 consecutive years.

If you have questions about how the SECURE Act will impact your IRA, 401(k) or retirement plan, turn to E.A. Goodman Law, LLC. Our trust and estate attorneys will help make informed decisions about retirement plans and your financial future. 

How Does this Law Impact IRA Trusts?

As mentioned above, estate planners have often relied on IRA trusts to provide beneficiaries with a guaranteed source of income. This is because these beneficiaries were allowed to “stretch” their distributions over their life expectancy, thereby reducing the tax consequences of inheriting an IRA. 

Under the SECURE Act, beneficiaries must take all distributions within 10 years of the account holder’s death. However, the 10-year rule does not apply to the following beneficiaries:

  • A surviving spouse
  • A minor child
  • A disabled beneficiary
  • Beneficiaries less than 10 years younger than the original account holder

Finally, current beneficiaries of an IRA or 401(k) are not required to make any changes if the original owner passed away prior to January 1, 2020. 

At E.A. Goodman Law, LLC, we are here to help you understand the new rules for IRAs, 401(k)s and inherited retirement plans under the SECURE Act. Our trusts and estates attorneys will partner with you to clarify your retirement and estate planning goals.

Contact Our Experienced New Jersey Estate Planning Attorney

Although the SECURE Act is intended to make saving for retirement easier, the reform measure raises new challenges for estate planners and IRA holders. When you consult with E.A Goodman Law, LLC, we will assess the impact of the SECURE Act on your retirement and estate plans, and work closely with you to plan your financial future. 

Our experienced elder law and estate planning attorneys have a well-earned reputation as trusted advisors and compassionate counselors. We tailor estate plans to each client’s unique needs and regularly prepare foundational essential planning documents, such as:

  • Last Will and Testament (will)
  • Durable power of attorney
  • Advance medical directive (healthcare proxy)
  • Revocable trust
  • Irrevocable trust (e.g. special needs trust, Medicaid trust)
  • Living will

At the same time, we know that life transitions mean that your estate plan must be realigned to those changes, which is why we provide ongoing counsel to ensure your plan is on target. We are committed to helping you achieve your retirement and estate planning objectives. If you have questions about the SECURE Act or have other estate planning needs, E.A. Goodman Law, LLC will provide you with trustworthy advice and objective insights so that you can make informed decisions about your future. Please contact our office today to set up a consultation.