Congress recently passed a sweeping full-government spending package, The Further Consolidated Appropriations Act, 2020 (The Act). The law is accompanied by substantial changes for taxes and retirement plan funding and distribution. Not only does the new spending bill extend many tax breaks that expired in 2017, but it also includes the first significant retirement-related legislation since 2006, Setting Every Community Up for Retirement Enhancement (SECURE).
As a result of the Act, several popular tax breaks have been extended for individuals and businesses. Some of these extensions include:
The changes enacted though SECURE Act will also affect both individuals and businesses, but the implementation will directly impact the way workplace retirement accounts are established and maintained. Some of the retirement plan changes include:
According to BDO USA, LLP the following regulations are immediately in effect for retirement plans to comply with the new standards:
In addition to the changes above, SECURE also includes tax incentives for employers who offer automatic enrollment retirement plans.
What does this mean for individuals and businesses?
The effects of these laws will depend on specific tax and retirement situations. However, taxpayers who qualify for the extended tax breaks should consider filing amended 2018 tax returns. Individuals and businesses affected by changes in retirement savings need to adjust accordingly. Businesses who have been wanting to implement a retirement plan for employees might consider starting one now. Because of the potential complexity of these issues, we recommend consulting a professional trained to maximize benefits and effectively plan for the future. The tax and estate planning professionals at BSB can answer your questions and offer guidance to incorporate current law.