The SECURE Act (Setting Every Community Up for Retirement Enhancement Act of 2019) was passed on Dec. 20, 2019 and is now effective for the 2020 tax year. It made many changes to how you save money for your retirement, how to use your money in retirement, and how you can better use your Section 529 plans.

Some highlights follow:

RMDs Start at Age 72—Before the SECURE Act, you generally had to start taking required minimum distributions (RMDs) from your traditional IRA or qualified retirement plans in the tax year you turned 70.5. Now you can wait until the tax year you turn age 72.

No Age Limit for Traditional IRA Contributions—Prior law stopped you from contributing funds to a traditional IRA if you were 70.5 or older. Now, if you have earned income, you can make traditional IRA contributions at any age, just as you could and still can with a Roth IRA. This change applies to contributions made for tax years beginning after December 31, 2019.

Elimination of the “Stretch” IRA Provisions—Inherited retirement plans (non-spouse beneficiaries) would no longer permit the “stretch” for beneficiaries to take RMDs over their own life expectancy. Generally, the accounts will now need to be liquidated within 10 years.

Birth and Adoption of a child—Taxpayers would be able to take a distribution from a retirement plan of up to $5,000 without the 10% penalty in the event of a birth or adoption. This distribution must be within one year of the event.

529 Distributions for Student Loans—Qualified educational expenses of 529 plans will now include monies used to pay student loans. There is a $10,000 aggregate for amounts that can be distributed. Caution: To date, New York State has not adopted this Federal law.

Whether you are age 35 or age 75, these new tax laws affect you.

Barry Lisak is an IRS Enrolled Agent, meaning that he has passed special U.S. Treasury Department exams that qualify him to represent clients dealing with audits or tax-resolution cases. Any questions can be directed to him at (516) TAX-SAVE, or

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