New Retirement Plan Changes – overall the changes made in the SECURE Act are generally positive. Here’s a quick recap of some of the more important changes:
Expansion of Opportunities to Increase Savings:
- Repeals the maximum age for traditional IRA contributions, effective 1/1/20.
- Raises the required minimum distribution age from 70½ to 72, effective 1/1/20.
Increases Access of Small Employers to Qualified Retirement Plans:
- Allows unrelated employers to band together to create pooled employer plans effective for plan years beginning after 12/31/20.
- Increases the annual limit on the credit for small employer pension plan start-up costs to a maximum of $5,000 for years beginning after 12/31/19.
- Allows a group of similar qualified plans to file a consolidated Form 5500, effective for plan years beginning after 12/31/21.
- Adds a fiduciary safe harbor for satisfying the “prudent man” requirement with respect to the selection of annuity providers, effective 12/20/19.
Despite these more taxpayer-friendly rules, there are two provisions in the SECURE Act that are generally seen as negative. The first is the elimination of the “stretch IRA.” The SECURE Act changes the stretch period applicable to non-spousal inherited IRAs, generally from a lifetime distribution period to a 10-year maximum distribution period, effective for distributions with respect to participants/IRA owners who die after 12/31/19. The second negative provision is the significant increase in penalties in failing to file Form 5500 and provide certain notices to participants for those plans required to do so.
Please contact us if you have any questions about these changes, and otherwise stay healthy and well! Mike and Staff
Wittenberg CPA, PS
329 W. Railroad Avenue, Suite 200
P.O. Box 1783
Shelton, WA 98584
Ph (360) 426-0230 Fx (360) 426-1464
1401 4th Avenue E., Suite 201
Olympia, WA 98506
Ph (360-350-4460 Fx (360) 338-0269