The recently enacted SECURE Act has made changes to the laws affecting retirement accounts, which are both good and bad for taxpayers. In this blog I will cover the highlights of the positive changes for taxpayers.
Beginning in 2020, the SECURE Act changes the require beginning date (RBD) for required minimum distributions (RMD) from retirement accounts from April 1 of the year following the taxpayer reaching 70 ½ to April 1 of the year following the taxpayer reaching 72. The change is in recognition of the large number of taxpayers who have continued working past age 72.
Another major change is the removal of the prohibition of contributions to Individual Retirement Accounts after reaching the age of 70 ½. Contributions to IRAs can continue even after reaching 72.
Part-time employees 21 years and older, are now able to participate in 401(k) and 403(b) plans provided that they work at least 500 hours per year for at least the prior three years.
Parents of new children, through birth or adoption, can take out up to $5,000 from their retirement account during the first year after birth or adoption without the imposition of the 10% penalty for early withdrawals.
For more information about the bad news of taxpayers under the SECURE Act, please see my separate blog article entitled The SECURE Act – The Bad News.
Joseph W. Kenny is a director and shareholder of Hamblett & Kerrigan, P.A. and practices in the areas of estate planning and taxation. He is also a Certified Public Accountant with certification as a Personal Financial Specialist. You can reach Attorney Kenny by email at [email protected].