There have been several recent changes made to the structure of IRAs with the passing of the Setting Every Community Up for Retirement Enhancement (SECURE) Act in December 2019 and the Coronavirus Aid, Relief, and Economic Security (CARES) Act in March 2020. Here’s a look at those changes:
SECURE Act changes to retirement accounts:
- RMD changes: Up until the passing of the SECURE Act, holders of IRAs were not allowed to make contributions and were obligated to begin taking Required Minimum Distributions (RMDs) when they reached age 70 ½. Now, the age for RMDs has increased to 72. Also, IRA holders can now continue making contributions indefinitely, as long as they can demonstrate earned income.
- Changes for workplace retirement plans: Part-time employees who work at least 500 hours in three consecutive years and meet the age requirements can now participate in employer retirement plans. This change takes effect in January 2021. Also, small businesses can now team up with other organizations when opening an employer retirement plan.
- Changes for inherited IRAs: Non-spousal inheritors of IRAs must now empty the account within 10 years.
CARES Act changes to retirement accounts:
- Changes for RMDs: The CARES Act waived all RMD requirements for IRAs for the year 2020.
- Special allowances for coronavirus-related withdrawals: The CARES Act provides for expanded distribution options and favorable tax treatment for up to $100,000 of qualified coronavirus-related distributions.