The new year has brought us the Setting Every Community Up for Retirement Enhancement Act of 2019, referred to as the SECURE Act, which contains a number of significant changes to IRA and 401(k) retirement plans.
- Repeal of maximum age at which traditional IRA contributions can be made
- An increase to age 72 for beginning to take required minimum distributions
- Requirement that the plan benefits inherited by most non-spouse beneficiaries must be paid out by the 10th anniversary of the plan holder’s death.
Another major change included in the new law regards private foundations. Prior to 2020, a private foundation’s investment income was taxed at 2%. If certain distribution requirements were met, the excise tax was reduced to 1%.
Under the SECURE Act, the excise tax is set at a flat 1.39% as of the beginning of 2020, regardless of the amount of distributions. This means that it is no longer necessary to monitor how much needs to be distributed to qualify for a lower excise tax rate.
For questions about the SECURE Act and how this impacts you, please contact Richard Lee at 301.231.6268.