On December 20, 2019, President Trump signed the Further Consolidated Appropriations Act, 2020, a spending bill that includes the Setting Every Community Up for Retirement Enhancement Act of 2019 (the “SECURE Act”). The SECURE Act initially passed the House in May, as discussed in our S&W Benefits Blog “The SECURE Act – A Primer on the top Six SECURE Act Changes that could be coming to Retirement Plans Next Year”, but fizzled out in the Senate. The SECURE Act was later added to the Further Consolidated Appropriations Act, 2020, which passed Congress and was sent to the White House on December 19. The SECURE Act makes a number of key changes to retirement legislation and is the most significant retirement legislation since the Pension Protection Act of 2006.
One highlight of the SECURE Act is the age increase for required minimum distributions from age 70-1/2 to age 72. The current rule generally requires individuals to begin taking required minimum distributions from their retirement plan accounts by April 1 following the year in which the individual reaches age 70-1/2 or retires, if later (provided the individual doesn’t own more than 5% of the employer) and from their individual retirement accounts (“IRAs”) by April 1 following the year in which the individual reaches age 70-1/2. The SECURE Act allows individuals to postpone required minimum distributions from age 70-1/2 until age 72. This change is effective for individuals who turn age 70-1/2 in calendar year 2020 or later. Individuals who turned age 70-1/2 in 2019 or earlier are not impacted by this change.