Guidance issued on SECURE Act retirement plan changes

Tax Hot Topics newsletter The IRS issued Notice 2020-68 to provide initial guidance in the form of questions and answers regarding certain retirement plan changes made by the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act) and the Bipartisan American Miners Act of 2019.

The guidance addresses the following changes:

  • The new business credit under Section 45T for employers that establish an eligible automatic contribution arrangement (EACA) under a qualified employer plan
  • The repeal of the maximum age (previously 70-1/2) for traditional IRA contributions
  • The new requirement that 401(k) plans must cover employees who complete three consecutive years with at least 500 hours of service
  • The new exception to the 10% additional tax for any qualified birth or adoption distributions from qualified retirement plans (including traditional and Roth IRAs)
  • The new rule that permits excluded difficulty of care payments (as defined in Section 131) to be taken into account as compensation for purposes of determining certain retirement plan contribution limits
  • The lowering of the minimum age for allowable in-service distributions under Section 401(a)(31) from 62 to 59-1/2

The notice also provides guidance on deadlines for plan amendments to implement the changes and indicates the IRS anticipates issuing further guidance on some of these changes, including regulations, as may be appropriate.

Jeff Martin
Washington National Tax Office
T +1 202 521 1526

Keith Mong
Managing Director
Washington National Tax Office
+1 202 521 1554

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