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SECURE ACT

The Secure Act – Effective 1/1/2020

Summary of Changes Brought About by the Secure Act

The “Setting Every Community Up for Retirement Enhancement” Act (the SECURE Act) was signed into law by the President on December 20, 2019 and became effective January 1, 2020. The following is a brief summary of some of the Act’s provisions.

Repeal of the Maximum Age for Traditional IRA Contributions

Before 2020, traditional IRA contributions were not allowed once the individual attained age 70½. Starting in 2020, the new rules allow an individual of any age to make contributions to a traditional IRA, as long as the individual has compensation, which generally means earned income from wages or self-employment.

Required Minimum Distribution Age Raised From 70½ to 72

Before 2020, retirement plan participants and IRA owners were generally required to begin taking required minimum distributions, or RMDs, from their plan by April 1 of the year following the year they reached age 70½. The age 70½ requirement was first applied in the retirement plan context in the early 1960s and, until recently, had not been adjusted to account for increases in life expectancy.

For distributions required to be made after Dec. 31, 2019, for individuals who attain age 70½ after that date, the age at which individuals must begin taking distributions from their retirement plan or IRA is increased from 70½ to 72.

Elimination of Stretch IRA Provisions for Inherited IRAs

For deaths of plan participants or IRA owners occurring before 2020, beneficiaries (both spousal and non-spousal) of inherited IRAs were generally allowed to stretch out the tax-deferral advantages of the plan or IRA by taking required minimum distributions (RMDs) over the beneficiary’s life or life expectancy (in the IRA context, this is sometimes referred to as a “stretch IRA”).

However, for deaths of plan participants or IRA owners on or after January 1, 2020, inherited IRAs are required to be completely distributed within 10 years following the death of the original account owner, with a few limited exceptions. As a result of this change, the “stretching” strategy is no longer allowed.

Exceptions to the 10-year rule are permitted for distributions to: (1) the surviving spouse of the plan participant or IRA owner; (2) a child of the plan participant or IRA owner who has not reached majority; (3) a chronically ill individual; and (4) any other individual who is not more than ten years younger than the plan participant or IRA owner. Those beneficiaries who qualify under these exceptions may generally still take their RMDs over their life expectancy (as permitted under the rules in effect for deaths occurring prior to 2020).

In view of this significant change to the RMDs for inherited IRAs, estate plans put in place prior to January 1, 2020 may need to be revisited.

  • Know Your Rights as an Employee
    Princeton Adult School Zoom Online Video Conference
    Tuesday, October 13, 2020 from 7:00–8:30 pm.

    Elizabeth Zuckerman, Esq. will be conducting a virtual course on October 13, 2020 - Know Your Rights as an Employee. Topics include harassment, hostile work environment and discrimination on the basis of age, race, gender, sexual orientation, disability and other protected statuses. The concept of reasonable accommodation and the interactive process will be explored. There will be discussion regarding the New Jersey whistle-blower law, wage and hour laws, family leave laws, non-compete agreements, new employee protections as a result of COVID-19 and common law claims, such as breach of contract and intentional infliction of emotional distress. In addition, hypothetical employment claims based on real life employment experiences will be discussed. Register at https://www.ssreg.com/princeton/classes/results.asp?code=120.

  • New Jersey Planning Officials Training Session - October 3, 2020

    Edwin W. Schmierer, Esq., a firm Director, will be an instructor for the New Jersey Planning Official’s Planning and Zoning Board members training session in Somerset County on October 3, 2020. Mr. Schmierer chairs the firm’s Government Practice Group and represents a number of land use boards including the Lawrence Township Planning Board and the Zoning Board of Adjustment, Borough of Pennington Joint Planning and Zoning Board of Adjustment and the West Windsor Zoning Board of Adjustment. The New Jersey Planning Officials can be reached at [email protected] for any land use board member interested in attending the training session.

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  • COVID-19 Employment & Financial Update (3/24/2020)

    Click Link Here to read important information regarding the Families First Coronavirus Response Act.

  • NELA-NJ Attorney Zuckerman

    In a recent decision (Justin Wild v. Carriage Funeral Holdings, Inc.), the New Jersey Supreme Court determined that an employee who is fired for using medical marijuana outside the workplace may bring a claim for disability discrimination under the New Jersey Law Against Discrimination. Mason, Griffin & Pierson Attorney, Elizabeth Zuckerman, who argued the cause for Amicus Curiae National Employment Lawyers Association of New Jersey, stated the "decision is a win for employees who test positive for marijuana due to their lawful use of medical marijuana outside the workplace."