By: Charles Brown, M. Brown Financial Advisors, April 20, 2020

The SECURE Act and CARES Act were recently signed into law.  They both have many moving pieces.  For the SECURE ACT, I think the most important point for investors is the raising of the Required Minimum Distribution age to 72.  Other details of the SECURE Act are listed below.

For the CARES Act, investors need to know that the Required Minimum Distributions for 2020 have been waived.  Also, the 10% penalty for early distributions from eligible retirement plans has been waived for certain individuals affected by the Corona Virus.  Please see the additional details below.


The SECURE Act is designed to ease the looming retirement savings crisis by:

  • Making it easier for small businesses to offer their employees 401(k) plans by providing tax credits and protections on collective Multiple Employer Plans
  • Allowing retirement benefits for long-term, part-time employees
  • Removing maximum age limits on retirement contributions, formerly capped at age 70½
  • Raising the required minimum distribution (RMD) age to 72 from 70½
  • Allowing penalty-free withdrawals up to $5,000 from retirement plans for the birth or adoption of a child
  • Relaxing rules on employers offering annuities through sponsored retirement plans
  • Allowing penalty-free withdrawals of up to $10,000 from 529 education-savings plans for the repayment of certain student loans
  • Revising components of the Tax Cuts and Jobs Act that raised taxes on benefits received by family members of deceased veterans, as well as students and some Native Americans
  • And to raise an estimated $15.7 billion to pay for these changes: removing the stretch IRA estate-planning strategy that permits non-spouse beneficiaries of IRAs to spread disbursements from the inherited money over their lifetime. The new limit will be within 10 years of the death of the original account holder


Relief Related to Retirement Plans for Individuals.

  • Waiver of 10% Early Withdrawal Penalty Tax on Early Distributions from Eligible Retirement Plans. The Act waives the 10% penalty tax on early distributions for distributions up to $100,000 in 2020 made to an individual (i) who is diagnosed with COVID-19, (ii) whose spouse or dependent is so diagnosed or (iii) who experiences adverse financial consequences as a result of being quarantined, furloughed, laid off, having work hours reduced due to the virus, or closing or reducing hours of a business owned or operated by the individual due to the virus.
    • Inclusion in income is spread over 2020, 2021 and 2022, unless otherwise elected.
    • For the three-year period beginning on the date after the distribution is received, the participant can contribute up to the amount received as a coronavirus-related distribution to a plan to which the participant could make an eligible rollover contribution (and if so contributed, the distribution will be treated as a nontaxable eligible rollover distribution).
  • Increased Loan Amount from Qualified Plans. The Act has increased the limit on loans from qualified employer plans to be the lesser of (x) $100,000 (instead of $50,000) and (y) the present value (instead of ½ the present value) of the employee’s nonforfeitable accrued benefit under the plan (or, if greater, $10,000).  The Act also delays the due date for outstanding loans from qualified employer plans that would otherwise be due in 2020 for one year.
  • Temporary Waiver of Required Minimum Distributions. Required minimum distributions are waived during 2020 for defined contribution retirement plans, therefore permitting a further deferral of taxes and allowing account balances to rebound.

*From Investopedia –

**From The National Review –

***The above article is informational in nature only and is not a recommendation to buy or sell securities.  All information is gathered from sources believed to be reliable, but neither Charles Brown nor Ausdal Financial Partners, Inc guarantees the accuracy of the information.  All investments carry a degree of risk.  Individuals should consult with their tax and investment professionals before making changes to their investment portfolios.

****Securities and Investment Advisory services offered through Ausdal Financial Partners, Inc, 5187 Utica Ridge Road, Davenport, IA 52807 (563)326-2064. Member: FINRA/SIPC. M.Brown and Associates / M. Brown Financial Advisors and Ausdal Financial Partners are independently owned and operated.