The Setting Every Community Up for Retirement Enhancement Act (“SECURE Act”), passed in December 2019, has made changes that will, as you might guess, impact those approaching or navigating their retirement years. Many of the changes may also impact small business owners & retirement plan fiduciaries, the details of which can be found here.
While not an exhaustive list, the provisions below create opportunities for families to revisit their tax strategy, estate plan, and retirement projections. Keep in mind, the IRS will need to provide additional guidance on execution of many of the provisions, which we will be on the lookout for in the coming months.
 

KEY PROVISIONS

  • “Stretch” IRA Elimination: Non-spouse beneficiaries of inherited retirement accounts must be paid out within 10 years of the original owner’s death (exceptions apply), beginning with accounts inherited in 2020.  No annual minimum distribution is required.
  • IRA Distribution Required Beginning Date (RBD) Raised: For those born after June 30, 1949, the required age to begin minimum distributions from retirement accounts was raised from 70 ½ to 72.
  • Qualified Charitable Distributions (QCD) No Longer Tied to RBD:  QCDs, which are gifts to charity made directly from an individual retirement account (and therefore excluded from adjusted gross income), may still be completed beginning at age 70½.  The annual QCD ($) maximum still applies.
  • IRA Contribution Cap Removed:Age limit on IRA contributions (age 70½) has been removed. Contributions may be made as long as there is earned income to contribute. Contributions made after 70½ impact QCDs.
  • 529 Plans “Qualified Higher Education Expenses” Definition Expanded: Up to $10k may be distributed from a 529 plan to make student loan payments. In addition, some costs associated with DOL-registered apprenticeship programs now qualify.
  • Qualifying Birth or Adoption Exclusion Added: Up to $5k per parent may be distributed from a retirement account penalty-free for each qualified birth or adoption. Repayment of these distributions is permitted, but timing of repayment is still to be determined.
The information provided is for educational and informational purposes only and does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor’s particular investment objectives, strategies, tax status or investment horizon. You should consult your attorney or tax advisor. The views expressed in this commentary are subject to change based on market and other conditions. These documents may contain certain statements that may be deemed forward looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Any projections, market outlooks, or estimates are based upon certain assumptions and should not be construed as indicative of actual events that will occur. For additional information, please visit: https://verumpartnership.com/disclosures/