The SECURE Act
The SECURE Act – formally titled the Setting Every Community Up for Retirement Enhancement Act (H.R. 1994) – was passed by the House of Representatives on May 23 by a 417-3 margin. However, it mus also be approved by the Senate in order for the bill to become law.
With 2019 almost behind us, the last chance the bill has for passing in 2019 is when Congress meets in December to discuss and pass the year-end spending bill.
The thinking is The SECURE Act will level the retirement plan playing field between small and large corporations. The passage of the bill would make less expensive and easier for small employers to offer a 401k plan. Many small business owners do not provide a workplace retirement plan because of high cost, legal complexity or the lack of time for administration.
Here are some of the provisions found in the SECURE Act:
401k plans including solo 401k plans could be adopted by the business tax return filing deadline instead of by December 31.
2. Extending the required minimum distribution (RMD) from age 70 1/2 to age 72 for IRAs and 401k plans.
3. Long-term part-time works could participate in 401k plans.
4. Traditional IRA contributions could be made past age 70 1/2; thus, resulting in allowing for the back-door Roth IRA past age 70 1/2.
5. The 10% early distribution penalty (distributions prior to age 59 1/2) would not apply to IRA distributions made for the purpose of using the funds to pay for “qualified birth or adoption distributions.”
6. The 10 year rule would apply to decedent accounts (both 401ks and IRAs). The retirement accounts would need to be fully distributed by the non-spouse beneficiary by the end of the tenth calendar year following the participant’s death, so the stretch IRA would essentially no longer apply to non-spouse beneficiaries
With 2019 almost behind us, the last chance the bill has for passing in 2019 is when Congress meets in December to discuss and pass the year-end spending bill.
The thinking is The SECURE Act will level the retirement plan playing field between small and large corporations. The passage of the bill would make less expensive and easier for small employers to offer a 401k plan. Many small business owners do not provide a workplace retirement plan because of high cost, legal complexity or the lack of time for administration.
Here are some of the provisions found in the SECURE Act:
401k plans including solo 401k plans could be adopted by the business tax return filing deadline instead of by December 31.
2. Extending the required minimum distribution (RMD) from age 70 1/2 to age 72 for IRAs and 401k plans.
3. Long-term part-time works could participate in 401k plans.
4. Traditional IRA contributions could be made past age 70 1/2; thus, resulting in allowing for the back-door Roth IRA past age 70 1/2.
5. The 10% early distribution penalty (distributions prior to age 59 1/2) would not apply to IRA distributions made for the purpose of using the funds to pay for “qualified birth or adoption distributions.”
6. The 10 year rule would apply to decedent accounts (both 401ks and IRAs). The retirement accounts would need to be fully distributed by the non-spouse beneficiary by the end of the tenth calendar year following the participant’s death, so the stretch IRA would essentially no longer apply to non-spouse beneficiaries
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