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PSCA Executive Reports

December 23, 2019

SECURE Act Included in Spending Legislation

Late on Friday, December 20, President Trump signed into law two spending bills to fund the government through September 30, 2020, one of which (H.R. 1865, the “Further Consolidated Appropriations Act of 2020” or the “Act”) contains the provisions from the Setting Every Community Up for Retirement Enhancement Act of 2019 (the “SECURE Act,” H.R. 1994). The House passed the two spending bills on December 17, and the Senate took action on December 19th, before sending it on to the President for his signature.

The SECURE Act includes almost thirty provisions aimed at encouraging the adoption of employer-sponsored plans and lifetime income options, altering plan distribution rules, easing administrative requirements, improving certain types of defined benefit plans, and more. Notably, a number of the provisions are effective with the New Year (which is fast approaching!).

Certain provisions in the act, such as the prohibition of plan loans using a credit card and qualified foster care/difficulty of care payments, are effective with the President’s signature (date of the enactment of this Act). There are a variety of other effective dates:

  • Distributions after December 31, 2018,
  • Distributions after December 31, 2019,
  • Distributions with respect to employees who die after December 31, 2019,
  • Distributions to individuals who reach age 70 ½ after December 31, 2019,
  • Taxable years beginning after December 31, 2018,
  • Plan years after December 31, 2019,
  • An employer’s taxable year beginning after December 31, 2019,
  • Tax returns whose due date is after December 31, 2019,
  • Distributions for taxable years beginning after December 31, 2019,
  • Plan years after December 31, 2020.

The Act also includes a number of other retirement and health and welfare provisions of interest to employers and service providers. Among other things, it repeals three tax provisions from the Affordable Care Act (“ACA”) – the “Cadillac tax,” health insurer tax, and medical device tax – and includes a series of tax and disaster-related provisions, including provisions affecting employee benefits.

Also included is legislation pushed by Senators Capito (R-WV) and Manchin (D-WV) to provide federal funding to the failing United Mine Workers’ of America pension plan. Provisions to address other multiemployer pensions facing insolvency and the Pension Benefit Guaranty Corporation multiemployer program were not included. A detailed write-up can be found here.

Certain agency guidance will be effective 12 months after final regulations (or sub-regulatory guidance) are issued. Certain Treasury guidance to be issued in the next six months, regarding treatment of custodial accounts on termination of Section 403(b) plans, will be retroactively effective for taxable years beginning after December 31, 2008. Provisions affecting the treatment of difficulty of care payments will apply to plan years ending after December 31, 2015. Certain community newspaper changes apply to plan years ending after December 31, 2017. And, there is a clarification regarding retirement plans of church-controlled organizations that will be effective for all plan years, including plan years before enactment.

You can find a downloadable PDF of the various provisions and their effective dates here. PSCA will provide additional details and updates in the next few weeks, including a special webinar briefing on the implications of this legislation on February 4 at 2 p.m. ET. 

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