The Setting Every Community Up for Retirement Enhancement (SECURE) Act, as part of the Further Consolidated Appropriations Act, 2020 (H.R. 1865, as amended) was signed into law on December 20, 2019. It will bring with it changes to retirement plans including individual retirement accounts (IRAs). Financial institutions offering IRAs should become familiar with the changes beginning with tax year 2020. Some of the notable IRA enhancements include:
- Extending the age for which minimum distributions from retirement plans and individual retirement accounts (IRAs) must commence from age 70-1/2 to age 72;
- The elimination of stretch IRAs – a strategy to extend the tax-deferred status of an inherited IRA when it is passed to a non-spouse beneficiary. Requires distribution within 10 years after the year the IRA owner’s death, except when the designated beneficiary is a surviving spouse or is disabled, chronically ill, a minor child, or not more than 10 years younger than IRA owner.
- The elimination of the maximum age (70 ½) for making contributions to an IRA;
- Permitting participants to transfer certain annuities to another eligible employer retirement plan or IRA.
If you are interested in more information on this topic, Compliance Resource will be hosting a webinar presented by Deborah Crawford titled Deposit Compliance Update 2020. The program will cover the SECURE Act and other upcoming deposit compliance changes. For more details or to register click here.