The U.S. House of Representatives set the stage for sweeping changes to retirement accounts by adding provisions of the Setting Every Community Up for Retirement Enhancement Act (SECURE Act) to a 2020 appropriations bill.

The SECURE Act—which was signed into law on December 20—will make a host of changes that affect how people save for retirement through individual retirement accounts (IRAs) as well as provide increased access to 401(k)s for workers.

The changes that have the potential to most directly affect high-net-worth investors include:

  • Annual RMD withdrawals age requirement pushed to 72 – Previously, individuals had to begin taking annual withdrawals—technically known as required minimum distributions (RMDs)—from their traditional IRA and 401(k) or similar tax-deferred employer-sponsored retirement plans once they reached age 70 ½. (Roth IRAs have no RMDs.) The new law increases that age to 72 for anyone who did not reach 70 ½ by the end of 2019. This change allows assets in the account to continue growing tax-deferred for a longer period of time.
  • No age limit for traditional IRA contributions – Previously, workers were prohibited from contributing to a traditional IRA once they reached age 70 ½. That age limit is eliminated under the SECURE Act. Starting in 2020, workers can fund their traditional IRA for as long as they earn income, regardless of their age.
  • Elimination of “Stretch IRA” provisions – Previously, a non-spouse beneficiary could take distributions from an inherited retirement account over his or her lifetime. For deaths occurring after December 31, 2019, a non-spouse beneficiary (exceptions for minor children, disabled individuals, or individuals who are not more than 10 years younger than the account owner) will have to take all distributions by the end of the 10th year after the original account owner’s death.

The SECURE Act also includes a host of other changes that are designed to increase workers’ access to employee-sponsored retirement plans or otherwise enhance participation and options within retirement plans. These changes include:

  • Lower barriers for small employers to offer a retirement plan through a multiple employer plan
  • Creation of a $500 tax credit for small employers creating a 401(k) or SIMPLE IRA that includes automatic enrollment for employees
  • Allowance of up to $5,000 of penalty-free distributions for the birth of a child or adoption
  • Increased access to annuities in qualified retirement plans
  • Enhanced reporting about the amount of lifetime income that could be purchased by a lump-sum distribution from a retirement plan

These are just a few of the changes that the SECURE Act will make to how Americans save for retirement starting in 2020. To learn more about what these changes mean for your individual situation, please contact your William Blair advisor. Watch for further communications from us as more details of the legislation emerge in 2020.


This information has been prepared for informational purposes and is not intended to provide, nor should it be relied on for, accounting, legal, tax, or investment advice. Please consult with your tax and/or legal advisor regarding your individual circumstances