b'The SHIELD sm The SHIELD smThe SECURE Act2020 WPMAEXPO Presidential Sponsor & Educational Session Presenter for Business OwnersWHAT DO INVESTORSNeed to Know About the Secure Act?If you have questions about how the SECURE Actlaw, employers may have been hesitant to include annuities changes may impact you and your financial situation,in their sponsored plans because of potential liability in speak to your financial or tax professional . selecting the insurance companies offering the annuities . The SECURE Act provides employers with immunity from Saving for retirement and education are important priorities forliability if it selects an annuity provider that meets certain many Americans . A new law that took effect in January 2020,requirements . These include, among other things, for the the Setting Every Community Up for Retirement Enhancementpreceding seven years, being licensed by the state insur-(SECURE) Act, aims to increase access to workplace retirementance commissioner to offer guaranteed retirement income plans and generally expand opportunities to save for retirement,contracts, filing audited financial statements as required in addition to making changes related to education savings . Hereby state law, and maintaining financial reserves that satisfy are eight things investors should know about the SECURE Act . state statutory requirements in all states where the annuity 1. Increase in the age for RMDs from 70 to 72 provider does business .Required minimum distributions, or RMDs, are mini- An annuity is a contract between you and an insurance mum amounts that you must withdraw annually from yourcompany in which the company promises to make periodic traditional IRA, 401(k), 403(b) or other retirement savingspayments to you, starting immediately or at some future plan once you have reached the mandatory age for makingtime . Some annuity contracts provide a way to save for withdrawals . The SECURE Act increases the mandatory ageretirement . Others can turn your savings into a stream of at which individuals must begin taking RMDs . retirement income . Still others do both . Annuities come with Prior to the SECURE Act, individuals with IRA accountsa variety of fees and expenses, such as surrender charges, or qualified employer-sponsored retirement plans weremortality and expense risk charges and administrative fees . required to take RMDs beginning in the year in which theyAnnuities also can have high commissions .turned 70, with a deadline (for the first RMD only) ofThe new law also makes annuities portable between April 1st of the following year . The SECURE Act increases theretirement plans . If you change jobs, it is now possible to, beginning age for RMDs from 70 to 72, a nod to the realityfor example, roll over a 401(k) annuity from your former that many Americans are working and living longer . Theemployer to another 401(k) or IRA, and avoid surrender change can help Americans extend their retirement savingscharges and fees .over a longer period . In addition, the SECURE Act will require new disclosures The fine print: If you turn 70 years old on or after Januaryabout how your retirement savings might be different if 1, 2020, you generally must begin taking RMDs by Aprilyou were invested in a lifetime income stream product 1st of the year following the year that you turn age 72 .like an annuity . The law requires that defined contribution However, individuals who turned 70 years old in 2019 areplans deliver to plan participants a disclosure document not eligible for the laws changes and generally must beginshowing the lifetime income stream equivalent that could withdrawing money by April 1, 2020, and then take anotherbe generated by the lump sum amount in the individuals RMD by the following December 31, and by every Decemberretirement account .31 thereafter . Failure to take RMDs at the required time mayThis means you would see an estimate of the monthly result in financial penalties, so pay close attention to howamount you could receive with a single or joint life annuity, This article is for generalthe new law might impact you . based on your current account balance . The law providesinformation and risk preven- immunity for the employer related to the income projec-tion recommendations onlyRMDs are calculated using life expectancy tables issuedand should not be consideredby the IRS in Publication 590-B . Updates to the lifetions . This provision will go into effect at a later date once legal, coverage, financial,expectancy tables were proposed prior to the SECURE Actscertain requirements have been addressed by the Depart-tax, or medical advice. Theadoption . If updates are officially adopted, they will not goment of Labor . information may be subject to regulations and restric- into effect until January 1, 2021 . Check the IRS websitetions in your state. There is(https://www .irs .gov) for updates .no guarantee following these3. 10-year draw down limit on inherited recommendations will helpIRAs for non-spousal beneficiariesreduce or eliminate losses.2.Potential for more lifetime income products, The information is accuratePreviously, non-spousal beneficiaries who inherited an IRA as of its publication date andlike annuities, in retirement plans were able to draw down the IRA over their lifetimes, and de-is subject to change. Quali- The SECURE Act includes several provisions facilitating thefer paying taxes on the entire inheritance amount (referred fied counsel should be soughtinclusion of annuities in retirement plans . Before the newto as an inherited or stretch IRA) . A stretch IRA is not a type regarding questions specific to your circumstances. Allcontinued on page 18rights reserved.16 www.wpma.com / Summer 2020'