COVID -19 UPDATES

We hope that you are keeping yourself, your loved ones, and your community safe from COVID-19 (commonly referred to as the Coronavirus). Along with those paramount health concerns, you may be wondering about some of the recent tax changes meant to help everyone coping with the Coronavirus fallout and we are here to help and keep you informed:

Below are links to COVID - 19 tax legislation and updates:

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Overview of the SECURE Act

5/8/2020

Overview of the SECURE Act - Individuals

~ Author - Nathan R. Musser, CPA, Deluzio & Company, Tax Supervisor ~

Retirement Piggy Bank

The President signed the Further Consolidated Appropriations Act, 2020 on December 20, 2019.  The Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE) (Division O of the Further Consolidated Appropriations Act, 2020), makes major changes for 401(k) plans and IRAs.  The highlights of retirement changes for individuals include:

IRA Changes

  • Moves the start date for required minimum distributions (RMDs) to the year in which the owner turns 72
  • Ends the 70½ age limit for contributions to an IRA
  • Shortens the distribution period for non-spouse inherited IRAs to a 10-year maximum

401(k) Changes

  • Requires plans to offer participation to long-term, part-time employees
  • Permits plans to adopt qualified birth or adoption distributions
  • Streamlines the safe harbor for employer non-elective contributions (the amount employer contributes regardless of employee’s contributions)

Other Changes for Individuals

  • Permits qualified birth or adoption distributions up to $5,000 exempt from the early-withdrawal penalty
  • Includes the following as compensation for purposes of retirement plan contributions
    • Taxable non-tuition fellowships and stipends (amounts received as payments for teaching, research, or other services required as condition for receiving scholarships)
    • Nontaxable “difficulty of care payments” earned by home healthcare workers (those who provide care to an individual who has a physical, mental or emotional handicap)

These provisions under the SECURE Act can have a significant impact on your tax liability and require proper planning. Please call our office to discuss these changes to retirement options and how they may affect your tax situation.