The Secure Act

With the passage of the SECURE Act on December 20th, 2019, employers are encouraged to offer new and more robust savings plans. There are also notable changes that will affect current tax-advantaged retirement accounts like IRAs.  Some new provisions under the Act  include:

  • Pushing back the age at which retirement plan participants need to take their required minimum distribution (RMD) from 70.5 to 72;
  • Removing the Stretch IRA provision. The new law requires a full payout from the inherited IRA for nonspouse beneficiaries within 10 years of the death of the original account holder;
  • Allowing 401(k) plans to offer annuities;
  • Permitting penalty-free withdrawals of $5,000 from 401(k) accounts to aid in adoption costs;
  • Allowing 529 accounts to pay for qualified student loan repayments up to $10,000 annually; and
  • Retirement plan eligibility for part-time employees working either 1,000 hours annually, or three consecutive years with 500 hours of service.

2020 Retirement Contribution Limits

In 2020 the maximum contribution to 401k and 403b plans will increase to $19,500. Catch up contributions of up to $6,500 are allowed for those who are age 50 and above. For traditional and Roth IRAs, the maximum contribution will increase to $6,000 with catch up contributions of $1,000 allowed. The maximum contribution for SIMPLE IRAs is $13,500 with catch up contributions of $3,000.