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Lesko Financial: New Retirement Act

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VESTAL, N.Y. -

 Transcript of Thursday's January 9, 2020 Lesko Financial segment that aired on Fox 40 News at 6.

ANDIE: THE YEAR HAS USHERED IN SOME BIG CHANGES FOR RETIREES AND THOSE SAVING FOR RETIREMENT. GREG LESKO OF LESKO FINANCIAL HAS THE DETAILS. GREG…

GREG: THANKS, ANDIE. A BILL WHICH BECAME LAW ON JANUARY FIRST AFFECTS AMERICANS’ RETIREMENT SAVINGS IN SOME SIGNIFICANT WAYS. THE “SECURE” ACT STANDS FOR “SETTING EVERY COMMUNITY UP FOR RETIREMENT ENHANCEMENT” AND WAS TIED TO A GOVERNMENT FUNDING BILL--SO IT RECEIVED BI-PARTISAN SUPPORT. ONE MAJOR CHANGE IS THAT THOSE SAVING IN TRADITIONAL IRA’S AND 401K’S WILL HAVE MORE TIME BEFORE THEY HAVE TO START TAKING RMD’S—REQUIRED MINIMUM DISTRIBUTIONS. PREVIOUSLY, THE WITHDRAWALS STARTED AT AGE 70 AND A HALF. THE NEW ACT RAISES THE AGE TO 72—FOR THOSE TURNING 70 AND A HALF THIS YEAR AND BEYOND.

ANDIE: WHAT OTHER MAJOR CHANGES ARE IN THE NEW ACT?

GREG: A BIG NEGATIVE CHANGE IS FOR NON-SPOUSE INHERITED IRA’S. PREVIOUSLY, THOSE WHO INHERITED THESE ACCOUNTS COULD SPREAD THE WITHDRAWALS OUT OVER THEIR LIFETIME. UNDER THE NEW LAW, ALL FUNDS HAVE TO BE WITHDRAWN WITHIN TEN YEARS OF THE IRA OWNER’S DEATH. UNFORTUNATELY, THIS WILL MEAN HIGHER TAXES FOR THE HEIRS EACH YEAR OF THE DISTRIBUTION. FOR TRADITIONAL IRA’S THIS ALSO MEANS A MUCH SHORTER PERIOD FOR THE MONEY TO GROW TAX-DEFERRED. AND FOR ROTH IRA’S A MUCH SHORTER PERIOD FOR MONEY TO GROW TAX-FREE.

ANDIE: ANY OTHER NEW PROVISIONS?

GREG: THERE ARE CHANGES INVOLVING WORKPLACE-SPONSORED RETIREMENT PLANS AND THE TYPES OF INVESTMENTS IN THOSE PLANS. BUT CONSIDERING ALL THE MEASURES CONTAINED IN THE NEW LAW, IT WOULD BE A GOOD IDEA FOR RETIREES AND THOSE SAVING FOR RETIREMENT TO TAKE A DETAILED LOOK AT THE SECURE ACT AND HOW IT AFFECTS THEM--WITH THE HELP OF THEIR FINANCIAL ADVISERS.