SECURE Act Affects Retirement and Tax Planning for Individuals
Paul Costantino, CPA, MST
Managing Shareholder at PDR Certified Public Accountants
On December 20, President Trump signed into law the Setting Every Community Up for Retirement Enhancement (SECURE) Act. It was part of the Further Consolidated Appropriations Act federal spending package.
In general, the SECURE Act is intended to expand opportunities for individuals to increase their retirement savings and to simplify the administration of retirement plans. Here are some changes that are most likely to affect individuals, including some that aren’t related to retirement savings.
No More Age Limit for Traditional IRA Contributions
Before the SECURE Act, you couldn’t make contributions to a traditional IRA for the year during which you reached age 70? or any later year. (There is no age restriction on Roth IRA contributions.)
The SECURE Act repeals the age restriction on contributions to traditional IRAs for tax years beginning after 2019. So, starting in the 2020 tax year, you can make contributions after reaching age 70? if you have taxable compensation.
The deadline for contributing for your 2019 tax year is April 15, 2020. However, you can’t make a contribution for 2019 if you were age 70? or older as of December 31, 2019. The age limit on traditional IRA contributions isn’t officially lifted until the tax year 2020.
Important: Be aware that any deductible IRA contributions made for the year you reach age 70? and later years can reduce your annual qualified charitable distribution (QCD) allowance. After reaching age 70?, you can make qualified charitable contributions of up to {continued}.