Feeling More Secure?
Congress recently passed and President Trump signed The SECURE Act, “Setting Every Community Up for Retirement Enhancement Act of 2019.” The provisions took effect on January 1 and change several aspects of retirement planning.
Before I get into the meat of the legislation, don’t you just love how well the government comes up with these super-snappy slogans? Who does this?
Well, onto the more pressing, I’m sure we all want to know what’s in the new law.
There’s a lot, seemingly something for most everyone. The bottom line, congress expects the changes to generate new revenue in excess of $16B on the next ten years.
The main provisions, Geezrs take particular note of the first three:
The act raises the age for Required Minimum Distributions, RMDs, from IRAs, 401ks and the like from 70½ to 72. This only applies to those not already 70½, there’s no going back.
The act eliminates the so-called “stretch IRA,” where RMDs for non-spousal beneficiaries were assessed over their lifetime. The new rule has no annual RMD, but the IRA must be emptied by the end of year ten. There are a few exceptions, for minors up to the age of majority, the chronically ill or disabled and those who are within ten years of the age of the deceased.
You can continue to make contributions to IRAs, etc. beyond age 70½ so long as you have earned income.
The act allows for more flexibility and less legal liability for smaller employers to set up and administer 401k plans.
Provides a fiduciary ESRIA Safe Harbor for selecting an annuity provider for qualified plans.
Allows for 529 plans to cover homeschooling and apprenticeships, and up to $10,000 of student loan indebtedness.
Repeals “Kiddie” tax provisions set up under The Tax Cuts and Jobs Act of 2017.
Allows up to $100,000 of Qualified Disaster Distributions, per disaster, from retirement accounts.
Penalty-free distributions up to $5,000 from qualified plans for birth or adoption.
Adds certain miscellaneous features to the tax code, such as qualified principal residence debt discharge is excluded from gross income, full deduction for qualified tuition and related education expenses is allowed, a mortgage insurance premium deduction is allowed and tax incentives for defined economic growth, energy production and green initiatives.
This is more, but the above captures the essence of the legislation. Some will be more impacted than others, if you would like to learn more, give me a call or email.
Feel more SECURE?