Proposed IRA Changes Don’t Have to Mean More Work for You
By Lisa Walker, CISP, CHSP
Multiple bills have been introduced in Congress in an effort to make meaningful, lasting improvements to IRAs and employer-sponsored retirement savings plans. Two bills currently making their way through Congress show promise and, if enacted, would make major changes to both. Such legislation has become a priority in Congress and bipartisan support is apparent among Republicans and Democrats in both the House and Senate, increasing the likelihood of proposed enhancements becoming law.
Your organization should be aware of the provisions of both the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019 and the Retirement Enhancement and Savings Act (RESA). They differ from one another only in minor ways, but in order to become law, House and Senate legislation must be identical. A “conference committee” process could be necessary to align differing provisions before enactment can occur. Significant changes to the IRA rules could include the following.
Nonspouse beneficiaries generally would be required to distribute inherited amounts within 10 years (SECURE Act) or 5 years (RESA), with certain exceptions.
Required minimum distributions (RMDs) generally would be required to begin at age 72—up from the current age of 70½ (SECURE Act).
Taxpayers with earned income could make Traditional IRA contributions at any age, not just for years before age 70½ (SECURE Act and RESA).
Certain stipend, fellowship, and similar payments to graduate and postdoctoral students would be treated as earned income for IRA contribution purposes (SECURE Act and RESA).
The birth or adoption of a child or of an individual who requires support would be an exception to the 10 percent early distribution penalty tax. Up to $5,000 per child in aggregate could be distributed penalty free from IRAs, qualified retirement plans, 403(b) plans, and governmental 457(b) plans; amounts could be repaid (SECURE Act).
Will your organization be ready if any of these proposed changes become law? Does the thought of learning new IRA rules and how to implement them in your existing IRA program cause anxiety? Having to make operational changes or adjustments to your system may present challenges when administering your IRA program with accuracy and efficiency. Law changes may also interrupt your existing procedures. But your organization will not have to worry about any of that if using Ascensus’ Fully-Administered Program.
Built-In Compliance Reduces Errors
With built-in regulatory compliance logic, Ascensus’ Fully-Administered Program automatically updates its functions to incorporate the latest regulatory and compliance changes—saving your organization from having to do the work. Using the Fully-Administered Program helps ensure the accuracy of each transaction and tax reporting form—before and after legislative changes have taken effect—preventing errors and saving your organization time and money. In essence, you don’t have to worry about what IRA legislative changes are coming around the bend.
Automatic Form and Document Updates Lessen Burden
Your organization is responsible for properly executing IRA transactions, keeping its forms current, and amending its IRA documents when required. With new regulations and legislative changes always in the works, the need to update your forms and documents may seem never-ending. The Fully-Administered Program removes this ongoing burden, as forms and documents are automatically updated and integrated into the program.
Accessible Knowledge and Expertise Provides Confidence
As for maintaining IRA expertise at your organization, the full-service support of the Fully-Administered Program gives your organization access to ERISA retirement experts who are ready to answer any of your IRA regulatory questions. It’s like having a team of seasoned professionals on staff at all times.
Complete Support Is Available
Ascensus can help relieve your concerns and alleviate the issues that may result from new legislation. Ascensus’ Fully-Administered Program provides your organization with complete administration, operation, and compliance support so that you can run a more efficient, compliant IRA business—without the extra work.
Watch Ascensus.com News to keep up with the latest legislative developments pertaining to IRAs and retirement plans. And to learn more about IRAs and any rule changes, Ascensus Academy offers multiple training opportunities.
