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Public Sector Retirement

News & Views | Q2 2020

WASHINGTON REPORT

THE SECURE ACT PASSED – NOW WHAT DO WE DO?

In our last newsletter we reported that provisions of the SECURE Act, which included a number of changes to retirement savings
plans, had passed in late 2019. Of the provisions in the Act, a few were applicable to public sector plans. As a plan sponsor, you
are probably wondering, what’s next? The changes generally apply to 401(k), Individual Retirement Accounts (IRAs), 403(b), and
governmental 457(b) plans and apply to withdrawals after 2019, unless otherwise noted. Changes are described below, followed
by NFP’s recommendations for next steps.
• Modified Required Minimum Distribution (RMD) Rules: The age that triggers RMDs was changed to age 72, from age 70-1/2.
This change affects distributions which would have been required for participants turning 70-1/2 after December 31, 2019 –
now the requirement to take distributions will be extended. For participants who reached age 70-1/2 on or before 12/31/19,
they are subject to the old rules and must take their RMDs. This change is required of subject plans.
• RMD rules for non-spousal beneficiaries changed, so that distributions must be taken generally within 10 years of the owner’s
death. Previously, non-spousal beneficiaries were allowed to use their own lifetime expectancy to determine the amount of
the RMD. This change is required of subject plans.
• Withdrawals for qualified births or adoptions: Plans may offer participants the option of taking a distribution or loan up
to $5,000, for a qualified birth or adoption. Such distribution would not be subject to a 10% early withdrawal penalty or
mandatory tax withholding. This change is optional for subject plans.

• An appropriations bill that the SECURE Act was attached to also has a $100,000 disaster relief option that plan sponsors can
adopt. We have few details at this time, and expect clarification from IRS and DOL when regs are drafted (see below, Timing
for Changes).
• The minimum age for in-service distributions may be decreased to age 59-1/2 (prior rules allowed in-service distribution at
age 70-1/2). This change is optional for subject plans.