SECURE Act Brings Changes

SECURE Act Brings Changes

02/01/2020 | Archive

On December 20, 2019, the President signed a spending package that included the Setting Every Community Up for Retirement Enhancement (SECURE) Act. The intends to changes to improve the nation’s retirement system through various changes that will help individuals trying to save and small business owners wishing to offer retirement plans.

The following are some of the key highlights.

Required Minimum Distributions
The required minimum distribution (RMD) age will be raised from the current 70½ to 72 for all qualified plans, including IRAs, 401(k)s, and other defined contribution plans. This would apply to individuals turning age 70½ in 2020.

IRA contributions after age 70½
Under the old law, an IRA owner older than age 70½ could not continue to contribute to an IRA despite the fact the individual had earned income. Under the new law, for 2020 and later tax years, the age cap for contributing to a traditional IRA is eliminated if the individual has earned income and is otherwise eligible to contribute to an IRA.

Qualified Charitable Distributions
The Act still allows an individual at age 70½ to make a Qualified Charitable Distribution (QCD) from their IRA. However, the QCD amount is reduced by any deductible contribution made to a traditional IRA post age 70½.

529 Education Savings Accounts
The Act expands 529 education savings accounts to cover costs associated with registered apprenticeships and up to $10,000 (lifetime) of qualified student loan repayments (including those for sibling). This is effective for distributions made after 12/31/2018.

Medical expense deduction threshold
Adjusts back to 7.5% of adjusted gross income for 2019 and 2020.

Whether you need to file your tax returns or want tax planning assistance, we provide the expertise you require. Contact the licensed professionals at Dean, Li & Magner, a preferred partner of Apple Federal Credit Union, today.