SECURE Act: Congress passes landmark retirement legislation

Bill Cass, CFP®, CPWA®

Bill Cass, CFP®, CPWA®, 12/19/19


Congress today passed the SECURE Act (Setting Every Community Up for Retirement Enhancement Act of 2019), which is expected to be signed into law tomorrow by President Trump.

With a broad range of provisions impacting retirement plans, plan participants, and individuals, this legislation represents the most significant changes to the retirement industry since the Pension Protection Act (PPA) of 2006.

The bill was attached to a package of Congressional spending appropriation bills needed to fund the federal government.

The legislation is designed to expand access to retirement accounts, promote participation, and preserve savings, albeit with some changes that will restrict heirs from benefitting from continued tax deferral on inherited retirement accounts.

Here’s a summary of the major provisions in the legislation:

How are charitable distributions from IRAs impacted?

While the law increases the age for required distributions from 70½ to age 72, there is no change in the eligibility age for qualified charitable distributions (QCDs), which remains at 70½. In the event an IRA owner requests a QCD in a tax year when making a deductible IRA contribution, the amount of the QCD is decreased by the amount of the deductible IRA contribution. For more information on QCDs, please refer to “Donating IRA assets to charity.”

The legislation also impacts 529 plans

  • Expenses related to qualified apprenticeship programs are considered qualified expenses for 529 plans
  • 529 account distributions, up to $10,000 total (not annually), can be used to repay student loans. This also applies to siblings of 529 account beneficiaries.
Most of the provisions are effective at the beginning of 2020, which means that careful planning, where possible, is needed. Individuals should consult with their financial advisor or tax professional about their personal situation.

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