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The SECURE Act and Tax Extenders – Impact on Individuals Thumbnail

The SECURE Act and Tax Extenders – Impact on Individuals

By: Marla R. Chambers, CPA, CFP® - Senior Financial Planner

In last month’s newsletter, Kristie Adams, CPA, described some of the small business changes that were included in the Setting Every Community Up for Retirement Enhancement (SECURE) Act that was signed into law on December 20, 2019. This month, I will discuss some of the provisions in the law that will impact individuals.


IRA Required Minimum Distribution Age Increased to 72 - Since 1987, the Required Minimum Distribution (RMD) age for IRAs has been 70½ years, while at the same time, the average life expectancy has increased from approximately 75 years to over 78 years. Individuals who turn 70½ in 2020 or later will not be required to begin taking distributions from their IRAs until the year that they turn 72. However, those who reach age 70½ prior to January 1, 2020 will still need to meet their RMD.

  • Planning opportunity – You may want to consider Roth IRA conversions after retirement through to your RMD age to take advantage of lower tax brackets (if available) before you are required to realize taxable income from RMDs.

IRA Contribution Age Limit Removed Beginning with 2020, workers may contribute to traditional IRAs beyond the age of 70½. However, the amounts contributed after reaching 70½ will reduce the amount allowed to be treated as a Qualified Charitable Distribution in future years (dollar for dollar).

Childbirths and Adoptions Included as Exception to 10% Penalty Beginning with 2020, individuals younger than 59½ may take up to $5,000 distributions from IRAs for qualified births or adoptions and avoid paying the early distribution penalty.

Removal of “Stretch” IRA for Non-spouse Beneficiaries – Most non-spouse beneficiaries of inherited IRAs (such as children, grandchildren) will be subject to a 10-year distribution cap and will no longer be able to take distributions from the IRA over their lifetime. These beneficiaries will now be required to have distributed the entire IRA within 10 years after the death of the owner of the IRA.

  • Planning opportunity – IRA owners with non-spouse beneficiaries (including see-through Trusts) need to speak to their financial planners about their specific situation as soon as possible.


For years after 12/31/2019, the Kiddie Tax calculation will revert to using the parents’ tax rates rather than (often higher) Trust tax rates. For the tax years 2018 and 2019, you may elect to use the parents’ rates rather than the Trust tax rates. An amended return would be required to make this election for 2018.


The College Savings 529 Plan can now be used to pay for up to $10,000 of qualified education loans of beneficiaries or siblings of the plan. Additionally, certain apprenticeships qualify for education expenses that may be reimbursed by a 529 plan.

  • Planning opportunity – If you have student loans, you may want to consider opening a state deductible 529 plan (Collegeadvantage.com for Ohio) to take advantage of the state tax deduction ($4,000 in Ohio). Then, reimburse yourself for the student loan payments. Keep in mind however, that if you use 529 reimbursements to pay for the student loan payments, you cannot take the student loan interest as a deduction on the federal tax return. There is also a lifetime limit of $10,000 paid toward student loans.


This extender bill was also signed into law on December 20, 2019 and includes the following provisions and extensions:

EXTENDER PROVISIONS – Retroactive to January 1, 2018 (YOU READ THAT RIGHT – “2018”)

The following extenders will require amended tax returns for 2018 if applicable to you:

  • Mortgage Insurance Premium Deduction
  • Tuition and Related Expenses Deduction
  • Kiddie Tax Calculation (based on parents’ tax rates vs trust tax rates)
  • Non-business Energy Property Credit (such as qualified windows, doors, furnaces)
  • Exclusion from gross income for discharge of indebtedness of qualified principal residence
  • Planning opportunity – if you qualified for any of these extensions in 2018, you may want to consider amending your 2018 income tax returns.


  • Expensing rules for qualified film, television and live theatrical productions
  • Empowerment zone tax incentives
  • 2- or 3-wheeled plug-in electric vehicle credit
  • Energy efficient homes credit for contractors
  • Energy efficient commercial buildings deductions
  • Work Opportunity Credit
  • Employer Credit for paid Family and Medical Leave
  • Medical Expense Deduction floor retained at 7.5% of AGI Limit (instead of 10% as planned)


Taxpayers may make up to $100,000 in distributions from retirement accounts for qualified disasters (in a Federally declared disaster area) occurring from January 1, 2018 to February 18, 2020. These distributions are exempt from the 10% penalty, do not require a mandatory withholding, treated as distributed evenly over a 3-year period, and may be repaid within 3 years of the distribution.

Additionally, retirement plan loans may be increased to $100,000 (from $50,000) and may delay repayment for up to one year.