On December 20, 2019, President Trump signed the SECURE Act into law. This legislation changes the landscape for retirement savings and restores some older deductions that had expired in 2017.
Among the more significant changes involving retirement plans are the following:
* Raising of the age for mandatory retirement plan distributions from 70 1/2 to 72.
* Repeal of the maximum age to contribute to a traditional IRA (currently 70 1/2).
* Ability to withdraw $10,000 from an employer plan penalty free upon the birth or adoption of a child.
* Ability to use 529 Plan proceeds up to $10,000 to pay off student loans.
* Change to rule about distribution period for an inherited retirement plan. A non-spouse beneficiary must now withdraw the entire proceeds of the account within 10 years of the account owner's death, rather than over the beneficiary's lifetime.
* Rules for eligible employees for company sponsored plans have been relaxed to allow eligibility to part time employees working 500 hours a year.
Other non-retirement plan changes include:
* Excluding the discharge of debt from income on a principal home mortgage (retroactive to 1/1/2018).
* Reintroducing the deduction for private mortgage insurance as part of home mortgage interest (retroactive to 1/1/2018).
* Reducing the minimum deduction standard for personal medical expenses from 10% of AGI to 7.5%.
* Reintroducing the deduction for higher education tuition and fees (retroactive to 1/1/2018).
If you need guidance on the retirement changes, or if you think you want to amend your 2018 return based on the retroactive law changes, please contact us and we'll discuss how to handle things.