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5 Things Affluent Retirees Should Do Now that the SECURE Act Has Passed

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If you’ve turned on CNN, Fox News or MSNBC in the last three months, most of the headlines you’ve seen focused on impeachment, the trade war and Rudy Giuliani. It’s reminiscent of Groundhog Day. What have you not seen? The passage of the “Setting Every Community Up for Retirement Enhancement Act.” Not because of the mouthful it is, but because the SECURE Act was attached to an appropriations bill that was rushed through both houses to prevent another government shutdown.

What’s clear to anyone who has been paying attention is that there are wide-reaching planning implications that will affect different communities in different ways. Also clear: The new law will not “enhance” everyone’s retirement.

Below is advice for retirees and those who are about to retire with what should be enough resources to last through their golden years.

Required minimum distributions (RMD) are essentially the tax goalie for the IRS. After decades of deferring taxes on income earned, the Treasury wants its cut. Hence, at age 70½ you are required to distribute 3.65% of pre-tax retirement accounts. That money will show up on Line 4 of your 1040 and be taxed as income. This has long been loathed by affluent investors who don’t need the money but see their tax rate spike at 70, due to these distributions, paired with Social Security income.

Starting on Jan. 1, 2020, the 70½ RMD rule is changing. The SECURE Act delays distributions for everyone born on July 1, 1949, or later, to age 72. If you are not 70½ in 2019, you will fall under the new RMD rules. Why raise the age? People are living........

© Kiplinger