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Breaking News: SECURE Act

Amy L. Dalen, JD


On December 20 the President signed into law two spending packages that will fund the government through the rest of the fiscal year. Included in the spending packages were the Setting Every Community Up for Retirement Enhancement (SECURE) Act and a number of tax provisions, many of which may have an impact on your future financial planning. Our colleagues at HBK are currently reviewing these important provisions and will be providing a more in-depth look at what many of these provisions may mean for you. For now, the following provides a quick overview of some of the more impactful provisions:

SECURE Act Provisions

  • The age at which individuals need to start taking required minimum distributions (RMDs) has increased from age 70 ½ to age 72 (note that this increase only applies for individuals who have not reached the age of 70 ½ on or before December 31, 2019);
  • There is no longer an age cap for individuals to make contributions to Individual Retirement Accounts (IRAs);
  • Inherited IRAs must now be paid out over a ten (10) year period, and cannot be stretched out over the lifetime of the non-spouse beneficiary;
  • Up to $10,000 held in a Section 529 plan may now be used to pay off student debt; and
  • Up to $5,000 may be withdrawn, penalty free, from a Section 401(k) plan in order to help with the costs of childbirth or adoption (income taxes still apply).

Other Tax Provisions

  • Many taxes that were enacted as part of the 2010 health care reform law have been repealed, including the 2.3% medical device excise tax and the 40% excise tax on high-cost health insurance plans (known as the “Cadillac tax”);
  • A number of tax credits have been extended, including the work opportunity tax credit, credits for energy-efficient homes, and credits for health insurance costs of eligible individuals;
  • The high tax rate on investment income of private foundations has decreased from 2% to 1.39%;
  • The transportation fringe benefit tax that was imposed on tax-exempt organizations by the Tax Cuts and Jobs Act of 2017 has been eliminated; and
  • The changes made to the tax rates imposed on children’s unearned income (known as the “kiddie tax”) have been eliminated, so that the income will no longer be taxed at the higher tax rates of trusts and estates, but will now be taxed at the highest marginal tax rates of the child.

The historical and current information as to rules, laws, guidelines or benefits contained in this document is a summary of information obtained from or prepared by other sources. It has not been independently verified, but was obtained from sources believed to be reliable. HBKS® Wealth Advisors does not guarantee the accuracy of this information and does not assume liability for any errors in information obtained from or prepared by these other sources.

HBKS® Wealth Advisors is not a legal or accounting firm, and does not render legal, accounting or tax advice. You should contact an attorney or CPA if you wish to receive legal, accounting or tax advice.

Investment advisory services are offered through HBK Sorce Advisory LLC, doing business as HBKS Wealth Advisors. NOT FDIC INSURED – NOT BANK GUARANTEED – MAY LOSE VALUE, INCLUDING LOSS OF PRINCIPAL – NOT INSURED BY ANY STATE OR FEDERAL AGENCY

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