How SECURE Act Impacts Age Stipulations for Self-directed IRA?

The recent SECURE Act was passed with the intention to enhance the nation’s retirement system. With the December 2019 passing of the act, it now makes several changes to the law around estate planning and retirement planning. Here are some key changes you can look forward to.

New age for required distribution raised from 70.5 to 72 years. The increase of one and a half years is an opportunity for an investor to boost earning potential. The delay in start of Required Minimum Distributions (RMDs) also has one more benefit. Knowing when one is 70½ might be complex. But knowing when one would be 72 years old would be a simpler exercise. The increase to age 72 also conforms to the improving life expectancy of American citizens, and is thus considered a move in the right direction.

Another salient pointer here is that the plan participant can opt for payment the year he turns 72 years, or can defer it to April of the following year. So, if John is turning 72 in 2023, he can delay the start of the payment till April 1, 2024. This change will be applicable to those people who turn 70 ½ after December 21, 2019. For those born before 1st Jun, 1949, the old rule still applies.

The best part is that the participant can continue investing even after 70½ years. Earlier, people were not allowed to make contributions after this age. Now, as per the new law, if a person is an earning member of the society, he or she can continue making contributions to the IRA for an indefinite period. Now that more and more people are earning past their retirement age with digital gigs, this will turn out to be good news.

This was some information you need to know with the passing of the new SECURE Act and how it impacts the age stipulations for self-directed IRA contributions.