The SECURE Act of 2019

Posted On: January 14, 2020  0 Comments

The Setting Every Community Up for Retirement Enhancement
(SECURE) Act passed in December 2019 is a bi-partisan set of reforms that aims
to increase access to workplace savings plans and expand retirement savings. The
changes are effective for all taxable years beginning after December 31, 2019
except where noted.


workers eligible for 401(k)s

Part-time workers who have worked at least 500 hours per
year for at least 3 consecutive years and are at least 21 years old at the end
of the three-year period are guaranteed 401(k) eligibility.

RMD age increased

The Required Minimum Distribution age for retirement
accounts shifted from 70 ½ to 72 (only for taxpayers who reach age 70 ½ after
December 31, 2019).

No maximum age for IRA contributions

The bill repeals the maximum age limitation for traditional
IRA contributions (formerly restricted beginning the year a taxpayer reached


To go with the repeal of the maximum contribution age, taxpayers who make a Qualified Charitable Distribution must reduce the QCD exclusion by all deductible contributions to a traditional IRA made for all years ending on or after the year the taxpayers reaches age 70 ½ (but not taking into account any deductible IRA contribution already used to reduce the IRA contribution)

withdrawals for births or adoptions

In addition to the current penalty-free withdrawal
exceptions (disability, first home purchase, etc.), new parents can withdraw up
to $5,000 each from his or her own account without the 10% penalty within one
year of the birth or adoption of a child. Withdrawals that are not repaid will
be taxed as income.

No more
stretch IRAs

Required Minimum Distributions of inherited IRAs or defined
contribution plans can no longer be stretched out over the life of the
beneficiary. All assets must be distributed within 10 years. Exempt from the
new rule are “designated eligible beneficiaries”, which include the owner’s
spouse or minor child (with the remaining balance to be distributed within 10
years after reaching majority), chronically ill or disabled individuals, or an
individual not more than 10 years younger than the plan owner. The new
provision applies to deaths occurring after December 31, 2019.

and stipends can be treated as compensation

Certain taxable non-tuition fellowships and stipend payments
will be treated as compensation when determining eligibility and contribution
limits for retirement plans. This only applies to amounts received that were to
aid the taxpayer in the pursuit of graduate or postdoctoral study.

529s can
now cover apprenticeship costs

Section 529 Plans were expanded to extend tax-free treatment
of higher education expenses to cover fees, books, supplies, and equipment
required to participate in an apprenticeship program. The program must be one
registered with the Department of Labor.

leftover 529 funds toward your student loans

Tax-free distributions from 529 plans may be used to make
payments on qualified education loans, up to a lifetime maximum of $10,000 per
plan beneficiary, and $10,000 per each of the beneficiary’s siblings.

payments can be treated as compensation

Non-taxable “difficulty of care” payments will now be
treated as compensation when determining eligibility and contribution limits
for retirement plans.

Kiddie tax change repealed

The Tax Cuts and Jobs Act modification to the rules for
calculating taxes on a child’s earned and unearned income have been repealed
retroactively for tax years 2018, 2019, and going forward.


The bill also includes tax incentives for small employers to
encourage them to offer retirement plans to their employees, outlines qualified
disaster relief distributions, and greatly increases penalties for corporations
who fail to file required paperwork with the IRS and the Department of Labor.
You can read the full text of the bill on Congress’

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