In our last post we introduced the major areas of an important new piece of legislation, the SECURE Act. In that post we described the provisions that incent the establishment of new plans and retirement savings. In this post we discuss the provisions that cover individuals and participants, and we will provide a summary of the various effective dates in the Act.
Things that impact individuals and participants.
· The Act repeals the prohibition on contributions to a traditional IRA by individuals who have attained age 70 ½.
· The Act increases the age for required distributions from an IRA or plan to 72.
· The Act modifies the required minimum distribution rules to limit the period of payout after the death of the employee or IRA owner to 10 years if the beneficiary is not the spouse, more than 10 years older or not disabled or chronically ill. The change eliminates the commonly used “stretch” IRA technique as an estate planning device.
· The Act permits penalty-free withdrawals from retirement plans for qualified births and adoptions.
· The act clarifies the types of individuals that may be covered in the plans of church-controlled organizations, regardless of the source of compensation, including duly ordained, commissioned, or licensed ministers.
Effective Dates for Selected Act Provisions
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Chuck Humphrey is a former IRS and Labor attorney engaged in the practice of employee benefits law. He is the author of Fiduciary Responsibility eSource and can be reached at firstname.lastname@example.org or 716-465-7505.