In News & Commentary, Uncategorized

SECURE Act and Your Retirement Plan

In December of 2019, Congress passed The Setting Every Community up for Retirement Enhancement (SECURE) Act.

MGO is available to consult with plan sponsors and their advisors on how the SECURE Act provisions impact their retirement plans.   Some provisions are optional where noted.

Here are some changes that we think are important.

Required Minimum Distribution Age Increased (Required)

  • For anyone not already taking required minimum distributions, the age at which these starts was raised from 70 ½ to 72.  The effective date impacts distributions required to be made after December 31, 2019.

Long-Term Part-Time Employee Eligibility (Required)

  • Employees working at least 500 hours in three consecutive 12 month periods (and not already plan eligible) must be eligible to make 401(k) contributions.
  • Employees becoming eligible under this rule are not required to receive match or profit sharing.
  • Employees under age 21 remain ineligible, but service from original hire regardless of age counts for future eligibility.
  • Hours worked before 2021 are excluded so this will not impact your plan until 2024.

Safe Harbor Profit Sharing Notice Elimination (Optional)

  • Plans utilizing a 3% (non-elective) safe harbor profit sharing contribution, no longer have to provide a notice to employees 30 days before the beginning of the plan year.
  • Notices are still required if your plan has a safe harbor match (100% of first 3%, 50% on next 2 %).

Childbirth/Adoption Distributions (Optional – added by plan amendment)

  • Permits distribution of up to $5,000 for birth or adoption of a child.
  • Distribution is not subject to 10% early withdrawal for those under age 59 ½.
  • Distribution can be paid back to the plan to avoid taxation.

Modification of Required Distribution Rules for Designated Beneficiaries (Elimination of “Stretch” IRAs)

  • Beneficiaries (excluding spouses, minor children and disabled or chronically ill beneficiaries) of an inherited IRA for anyone that passes away after December 31, 2019, are required to take full distribution of the IRA within 10 years following the date of death.




We encourage you to reach out to our office to discuss this important legislation.