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How the New CARES Act and SECURE Act Affect You

The Coronavirus Aid, Relief, and Economic Security (CARES) Act, the newly signed $2 trillion stimulus bill signed into law on March 27, 2020, addresses economic and health-related issues resulting from the COVID-19 pandemic. The law consists of a few retirement-related provisions. One key provision of the new law suspends the required minimum distributions (RMDs) from retirement savings accounts, such as 401(a), 457(b), 403(b), as well as IRAs, for 2020. If this impacts you, learn more in the New CARES Act and SECURE Act Impact on Retirement Savings article.

Watch for messaging from ICMA-RC in the coming weeks regarding this and additional provisions related to the CARES Act. If you have any questions, please contact your ICMA-RC representative or our Participant Services team.

Also, late last year, Congress passed legislation designed to boost workers' retirement savings. Many  provisions of the Setting Every Community Up for Retirement Enhancement (SECURE) Act take effect this year. Here are some highlights you need to know:

More uses for 529 plans. The list of expenses that can be covered with tax-free money from a 529 college savings plan has been expanded and made retroactive to the beginning of 2019.

You can now use up to $10,000 tax-free from a 529 plan to repay the account beneficiary's student loans — a lifetime limit. Plus, you can withdraw up to $10,000 for each of the beneficiary's siblings to repay their education loans. And if a beneficiary opts out of the traditional college path and wants to learn a trade instead, 529 money can now pay for apprenticeship programs.

IRAs for graduate or post-doctoral students. Congress broadened the definition of compensation that qualifies for IRA contributions. Now, income from fellowships or stipends paid to graduate or post-doctoral students is eligible for IRA contributions.

Quicker IRA withdrawals for heirs. If you inherit a traditional IRA from anyone other than your spouse starting this year, you can no longer stretch withdrawals over your lifetime. Instead, you must draw down the IRA within 10 years following the year of the IRA owner's death. Non-spouse heirs who remain under the old rules include those who are disabled or chronically ill; not more than 10 years younger than the original account owner; or minors, but only until the age of majority — usually 18.

Get more answers to your questions about the SECURE Act in this FAQ document from ICMA-RC.

Please note: The contents of this publication provided by MissionSquare Retirement is general information regarding your retirement benefits. It is not intended to provide you with or substitute for specific legal, tax, or investment advice. You may want to consult with your legal, tax, or investment advisor to review your own personal situation. Some of the products, services, or funds detailed in this publication may not be available in your plan. This document may contain information obtained from outside sources and it may reference external websites. While we believe this information to be reliable, we cannot guarantee its complete accuracy. In addition, rules and laws can change frequently.

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