(Photo: Shutterstock)

This is the first in a series of articles describing key provisions of the SECURE Act, with a focus on the legislation's effect on required minimum distributions and other distributions and withdrawals. Recently signed into law as part of the Further Consolidated Appropriations Act, 2020, the SECURE Act makes numerous changes (including a variety of enhancements) affecting qualified retirement plans, 403(b) and 457(b) plans, individual retirement accounts, and other employee benefits. Employers should understand these changes to prepare themselves for the resulting effect on retirement plan administration and financial planning.

Some of the changes under the SECURE Act are effective immediately, while others are effective in plan or tax years beginning on or after January 1, 2020.  The Act provides for a remedial plan amendment period that does not end until the last day of the 2022 plan year (the 2024 plan year for governmental plans).  Therefore, plan sponsors generally have sufficient time to amend plan documents to comply with any required or optional changes. Nevertheless, employers must modify certain aspects of plan administration (and potentially financial planning decisions) now to align with the SECURE Act's more immediate changes.

Required minimum distributions

Some of the SECURE Act's most significant changes are to the Tax Code's required minimum distribution rules.