On May 23, 2019, the U.S. House of Representatives passed (417-3) the Secure Act with the support of both Republicans and Democrats. The purpose of the bill is to improve the country’s retirement system. The bill is currently in the U.S. Senate awaiting passage. Some of the main provisions that the Secure Act provides are as follows:
- It will repeal the maximum age for Traditional IRA contributions, which is currently 70.
- It will change the age to begin required minimum distributions from 70½ to 72.
- It will allow long term, part time workers to participate in 401k plans;
- It will allow more employers to offer 401k plans through tax credits and multi-employer plans;
- It will allow penalty-free withdrawals for child births or adoptions up to a maximum of $5,000.00 per year for birth or adoption qualified expenses;
- It will eliminate current rules allowing non-spousal IRA beneficiaries to use (stretch IRA) minimum distributions from an inherited account over their own lifetime. All funds from an inherited IRA will need to be distributed to non-spousal beneficiaries with 10 years of the IRA owner’s death. The Senate version of the bill allows for a stretch on $400,000.00 per beneficiary and amounts in excess must be distributed within 5 years.
Senator Chuck Grassley has indicated that part of the hold up of passage of the bill by the Senate is the provision which was stricken from the bill allowing 529 account funds to be used for home schooling, apprenticeships, private elementary and high school expenses, special needs students, and student loan expenses.
If you have additional questions or would like assistance with these items, please contact us at our office by calling 515-225-1100 or sending us a message through the contact form within this Web site.