The President signed the Further Consolidated Appropriations Act, 2020 on December 20, 2019. The new Act averts a government shutdown that would have begun on December 21, 2019, and includes several provisions related to retirement plan reform. The Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE) (Division O of the Further Consolidated Appropriations Act, 2020), makes major changes for 401(k) plans and IRAs. The highlights of retirement changes for individuals include:

IRA Changes

  • Moves the start date for required minimum distributions (RMDs) to the year in which the owner turns 72;
  • Ends the 70½ age limit for contributions to an IRA; and
  • Shortens the distribution period for non-spouse inherited IRAs to a 10-year maximum.

401(k) Changes

  • Requires plans to offer participation to long-term, part-time employees;
  • Permits plans to adopt qualified birth or adoption distributions; and
  • Streamlines the safe harbor for non-elective contributions.

Other Changes for Individuals

  • Permits qualified birth or adoption distributions up to $5,000 exempt from the early-withdrawal penalty; and
  • Includes the following compensation for purposes of retirement plan contributions:
  • Taxable non-tuition fellowships and stipends, and
  • Nontaxable “difficulty of care payments” earned by home healthcare workers.