The SECURE Act Passed ... Now What?
BY: Alex Pudlo
- IRA owners nearing age 70 ½ or 72: Required minimum distributions are being pushed out until age 72. (Yes, 72 – not some unusual half-year number that is harder to remember.) Also, IRA owners may now be able to contribute beyond age 70 ½, if otherwise eligible.
- Grantors and beneficiaries of 529 plans: Expansion of costs covered to include apprenticeships, limited student loan repayments, homeschooling, and private or religious schools.
- Part-time workers who WANT to be eligible for a 401(k) plan: If you work less than 1,000 hours per year, you may now be eligible for your employer’s retirement plan.
- 401(k) participants giving birth or adopting: “Qualified birth or adoption distributions” are now penalty-free.
- 401(k)/retirement plan sponsors (business owners, CFOs and controllers, HR professionals): There are simply too many changes to address in this space in a concise manner. Check with your advisor, TPA, CPA and attorney. A significant provision for smaller businesses: They are now eligible to receive up to $500 in tax credit per year for three years, for plans that include or add auto-enrollment, and are eligible for an increase of prior tax credit for plan start-up.
- Beneficiaries of NON-spousal beneficiary IRAs (i.e., “stretch IRAs”): Distributions can no longer be “stretched” any longer than 10 years. Possible implications for Special Needs individuals who benefit from a trust that was set up as the beneficiary of an IRA.
- 401(k) participants who want an annuity through their plan OR Insurance agents: (I will write a follow-up article on this topic, but here are a couple of quick facts…) The plan sponsor receives a fiduciary exemption when selecting annuity options for placement into 401(k) plans. Annuities have some portability features. Essentially, people are likely to see more annuities included in retirement plans.
- 401(k) participants taking loans through credit cards: This practice has been disallowed.
- Community newspapers with pension (i.e., defined benefit) retirement plans: With regard to pension-funding relief, the amortization period changed from seven to 30 years, reducing annual contributions.
- Home healthcare workers receiving “difficulty of care” payments: These payments now qualify as income eligible for determining retirement contribution limitations.