The SECURE Act and the CARES Act, and what they mean to you

April 24, 2020 – As more things keep evolving and changing, we keep thinking of new things that might be helpful to share with you. Our plan is to keep working hard to help you stay informed on topics as they arise that may be important for you to know. We don’t want to bombard you with information, so you may see less of these letters as things become more normal – but I think we can all agree that would be a wonderful thing!  We are all missing a more normal daily life, and I know there will come a time when we get there again.

The SECURE Act (Setting Every Community Up for Retirement Enhancement) became law on December 20, 2019.  It has several provisions that may affect you – both personally and possibly as a business owner.  Some main takeaways from the SECURE Act:

1. Repeals the maximum age for traditional IRA contributions, which is currently 70 ½. You are now able to make contributions at any age if you are still working.
2. Increases the required minimum distribution age for retirement accounts to 72 (from 70 ½)
3. New Inherited IRAs (after Jan 1, 2020) must now be taken within 10 years. There are some exceptions for surviving spouse, a minor child, a disabled or chronically ill beneficiary, or beneficiaries who are less than 10 years younger than the original IRA owner.
4. Allows long-term, part-time workers to participate in 401(k) plans
5. Allows parents to withdraw up to $10,000 from 529 plans to repay student loans.

In addition, the CARES Act (Coronavirus Aid, Relief, and Economic Security) was passed on March 27, 2020.  The purpose of the CARES Act is to provide fast and direct economic assistance for workers, families, and small businesses.  Some highlights of the CARES Act:

1. IRA owners who would otherwise be subject to required minimum distributions are now allowed to forego those distributions in 2020. This applies to regular RMD’s as well as initial RMD’s for people who are just turned 70 ½ in 2019.  If you have already taken your RMD for 2020 and are within a 60-day window, you have some options for returning it as an indirect rollover.
2. Americans will see Economic Impact Payments coming in the mail or to their bank account – if you have not received your stimulus, you can follow this link to get more information and check the status:
   1. https://www.irs.gov/coronavirus/get-my-payment
3. The SBA began several funding options for those seeking help due to coronavirus challenges, including:
   1. The Paycheck Protection Program was developed to help small businesses maintain their payroll.
   2. The Economic Injury Disaster Loan advance provides up to $10,000 to businesses experiencing difficulties
   3. SBA Express Bridge Loans allow small businesses to access up to $25,000 quickly
   4. SBA Debt Relief

For more information on any of these programs go to: www.sba.gov/funding-programs/loans/coronavirus-relief-options

4. Employee retention credits for employers that keep employees on their payroll with a 50% credit on up to $10,000 of wages paid from March 13, 2020 through December 31, 2020
5. Employers and self-employed individuals can defer payment of the employer share of the Social Security tax they otherwise are responsible for paying to the federal government for their employees. The deferred tax can be paid over the next two years.

For more information on employee retention credits or deferring the employer share of Social Security tax, see the following:  https://home.treasury.gov/policy-issues/cares

If you have any questions or concerns about how any of these changes affect your own personal situation, please give us a call.