The Setting Every Community Up for Retirement Enhancement (SECURE) Act changed the landscape for retirement and savings planning.  Don’t hesitate to reach out to us, your Sarasota CPA, with any questions.

Here are eight important reminders about this new law:

  1. You can’t use contributions made in 2020 but applied to 2019 for any SECURE Act provisions that apply to contributions made after December 31, 2019.
  2. If you inherit an IRA, you now have to empty it within 10 years. But there are many exceptions to this rule, including one for the surviving spouse.
  3. You determine whether your inherited IRA qualifies for the old stretch IRA rules on the date of death of the original owner.
  4. The “qualified birth and adoption” distribution exception to the 10 percent penalty is $5,000 per child per parent, based on our reading of the law.
  5. Your inherited IRA distributions don’t count toward your RMDs for your other retirement accounts.
  6. Minors who inherit an IRA get the old stretch rules, but once they reach the age of majority, they have 10 years from that date to deplete the account.
  7. The new $10,000 Section 529 allowable distribution for payments of principal and interest on student loans is a lifetime limit on the beneficiary, but you (the account holder) can apply excess distributions to the beneficiary’s sibling, and those distributions count toward the sibling’s $10,000 lifetime limit.
  8. The ability to retroactively create a stock bonus, pension, profit-sharing, or annuity plan does not allow plan participants to make retroactive elective deferrals. The retroactively created plan allows business contributions only. Remember, the retroactive ability applies in 2021. You hurt your plan participants by waiting. Don’t wait. Put your 2020 plan in place now.

We can be reached at 941-777-4700 or through our website.  We’re here to help your small business with your Sarasota tax planning and Sarasota small business CPA needs.