Chad Slagle - Winning in Retirement: When Every Day Is Saturday

Up until 1978, the only retirement plan available was a defined benefit plan, also known as a pension. A little was taken out of your paycheck each pay period and put into a plan that the company would hold and earn interest on. When you retired, you received a monthly income stream. But that income stream ended when you and your spouse passed away. Nothing went to your beneficiaries even though you might have contributed for a long time.

In 1978, 401(k) plans started, and they are what most people have now. A 401(k) is defined as a company sponsored retirement account that employees can contribute to, and employers may also make matching contributions (Investopedia). When an employee retires, it is their money, to do with what they want. The problem lies in the fact that if you dont invest it properly, it may not last throughout your lifetime. You could run out of money.

According to Investopedia, In recent decades, 401(k) plans have become more plentiful and traditional pensions increasingly rare, as employers have shifted the responsibility and risk of saving for retirement to their employees.

The SECURE Act is a new law that went into effect January 1, 2020. SECURE stands for Setting Every Community Up for Retirement Enhancement. It is important to understand what it means for you.

First, it limits stretch IRAs, meaning that instead of withdrawals from an inherited ( non - spouse ) IRA being stretched over the lifetime of the beneficiary, many beneficiaries will be required to take withdrawals within ten years after the original account owner has passed.

Stretch IRAs are basically gone. So, whats the wisest move for you? How can you structure your multigenerational IRA (MGIRA) strategy to create a legacy of lifetime income for your spouse, children, and grandchildren? Developing a strategy using life insurance and/or Roth IRAs is a great way to make sure your money is passed on to your beneficiaries and not the IRS.

Second, there is no age limit anymore for contributing to IRAs like 401(k)s and Roth IRAs. This means that if youre older than 70.5 and still working, you can keep making contributions.

Third, in terms of required minimum distributions (RMDs), if you were not 70.5 by the end of 2019, you can now wait until age 72 to begin taking RMDs.

With these RMD dates changing, what should you do with yours? If you dont need income immediately, dont take your RMD at 70.5. Wait until you are 72 so your money can stay in a tax - deferred account a little longer.

Fourth, there is now something called an annual disclosure of lifetime income from defined contribution plans. This means that plans are now required to show participants how much income could be generated from their current lump - sum balance.

There are a few other changes to note, such an annuity allocation in 401(k)s, smaller employer retirement plans, and penalty - free distributions.

As you can see, there are a lot of different options with the new SECURE Act, and you need to be sure you have a retirement specialist who is updating you on these types of changes.