Pub. 11 2020 Issue 1

www.wvbankers.org 16 West Virginia Banker C ongress enacted the SECURE Act in December 2019 with the primary goal of encouraging people to in- crease their retirement savings. Many of the new legal provisions under the Act will do just that, but there are also some traps for the unwary that can come with stiff penalties. The changes affect companies who have retirement plans, banks and trustees of such plans, and individuals who have wealth transfer or estate plans in place. To help navigate these new changes to 401(k)s, IRAs and other retirement plans, some highlights of the Act are provided below. • The Good: 72 is the new 70 1/2. Under the old law, a person generally had to stop contributing to a 401(k) or IRA and start taking a required minimum distribution (RMD) at age 70 1/2. Now it is age 72 (for anyone turning 70 1/2 after December 31, 2019). This is great news for re- tirement savers, but most 401(k) plans, 402(f) participant notices, and IRA account agreements will need updated. • The Bad: No more stretch, except in the 7th inning . Before the Act, people could stretch out the period over which their beneficiaries could take the RMDs to the beneficiary’s lifetime, which lessened the income tax impact. Called inherited or stretch IRAs, these were common in wealth transfer and estate planning. The Act reduces the stretch period to 10 years, except in limited The SECURE Act: The Good, the Bad and th By Emily Lambright, Bowles Rice LLP