The federal government spending bill passed on Thursday, December 19, 2019. The bill contains many tax provisions, repeals three health care taxes that were originally enacted as part of 2010 health care reform legislation, makes many changes to retirement plan rules, extends several expired tax provisions, provides disaster tax relief, and repeals the provision that taxed exempt organizations when they provided parking to their employees.
The three repealed health care taxes are the excise tax on certain high-cost employer health plans, the Cadillac tax; the medical device excise tax; and the annual fee on health insurance providers.
The bill incorporates the text of the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019, which passed the House in May but hadn’t previously been enacted by the Senate. The bill is designed to encourage retirement savings to address the expected shortfall of many American’s retirement accounts.
The bill introduces many changes for retirement accounts including:
- Increases the age after which required minimum distributions from retirement accounts must begin to age 72 (from 70 /12).
- Modifies requirements for multiple-employer plans to make it easier for small businesses to offer such plans to their employees by allowing unrelated employers to join in the same plan.
- Allows penalty-free distributions from qualified plans and IRAs for birth and adoptions.
- Makes it easier for long-term, part-time employees to participate in elective deferrals.
- Allows certain home health care workers to contribute to a defined contribution plan or IRA.
- Requires beneficiaries of IRAs and qualified plans to withdraw all money from inherited accounts within 10 years.
- Repeals the maximum age for IRA contributions (currently age 70 1/2).
The bill also extended many expired tax provisions and provides tax relief for victims of various disasters occurring in 2018, 2019, and up to 30 days after enactment of the bill.
Questions about how this may impact you? Give us a call at (712) 324-4614 or (605) 610-4611.
