Included in the 2020 Appropriations legislation passed last December was the SECURE Act. Included in the SECURE Act were changes that will affect individual retirement accounts (IRA) beginning in 2020.
Here are some of the key changes:
- Age restriction on traditional IRA contributions has been eliminatedFor tax years beginning in 2020 an individual may make contributions to a traditional IRA after reaching age 70 ½ .
- Required Minimum Distribution Age has been increased to 72For individuals who reach 70 ½ after 2019 they will not have to begin taking a required distribution until they become 72.If an individual turned 70 ½ before 2020 they still would have to begin taking a required distribution when they reached 70 ½.
- Additional penalty exemption for some distributions prior to age 59 ½Starting in 2020 distributions prior to age 59 ½ of up to $5,000 from a retirement plan that are used to pay expenses for child birth or adoption will not be subject to the 10% early distribution penalty.
- Allows contributions to traditional IRA for 70 ½ and beyondProvided an individual has earned income they can make a contribution to a traditional IRA after they reach 70 ½.
For more information see the following on the IRS website:
- Publication 590-A (Contributions to IRAs) – What’s New for 2019 and 2020 section
- Publication 590-B (Distributions from IRAs) – What’s New for 2020 section
