Financial advisers predict more love for Roth accounts in 2020 as the Secure Act takes effect.
This year already began with major changes, now that the Secure Act is in effect as of Jan. 1. The bill passed shortly before Christmas, and will change the way workers save for retirement and retirees contribute, spend or give away their assets. Other trends have been in motion over the last few years, including the way people prepare for health expenses in retirement or if and how they earn more money during these later years in life.
Under the Secure Act, non-spousal inheritors will need to withdraw all of an inherited accounts assets within 10 years, which could create higher tax consequences in a shorter time frame. Roth accounts are funded with after-tax dollars, and are therefore withdrawn tax-free. The Tax Cuts and Jobs Act, which was the largest tax law revamp in decades when it was passed in 2017, will also expire in 2025, which could potentially mean having higher tax brackets in the future.
Older workers staying in the workforce is increasingly common, and will continue in the future, according to Bureau of Labor Statistics data. The number of workers 65 and older has tripled in the last 30 years, and those 75 and older has almost quadrupled during the same time.
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