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Secure Act Impacts Retirees and Savers

Commerce Brokerage Services Inc

Secure Act Impacts Retirees and Savers

By Tom Bassett, J.D., CPA

Vice President, Tax Manager - East Region

January 21, 2020

The president signed into law late last year the SECURE Act, which stands for “Setting Every Community Up for Retirement Enhancement,” a significant piece of legislation that makes sweeping changes affecting many retirees and savers.

Note that many estate plans contain provisions related to retirement accounts and have references to “required minimum distributions (RMDs)” – these plans should be reviewed to ensure that the SECURE Act’s changes to those rules don’t have an unexpected impact on your plans.

Here is a quick review of what the SECURE Act does:

  1. Expands the ability of small employers to band together to offer 401(k) plans – which some don’t offer due to high compliance costs. The bill allows multiple employers to spread the cost of one plan across a larger base of assets/accounts.
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  3. Expands investment options inside 401(k) plans to make it more likely to have annuity options inside a plan.
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  5. Changes the age for “required minimum distributions” from IRAs and 401(k) from the current 70½ to age 72.
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  7. Permits persons over age 70½ to make contributions to a traditional IRA.
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  9. Provides a tax credit to certain smaller employers to encourage automatic enrollment into their retirement plan.
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  11. Adds a new exemption from the 10% penalty tax for withdrawals connected to a ‘qualified birth or adoption
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  13. Requires that defined contribution plans (most 401(k) plans and 403(b) plans) deliver a “lifetime income disclosure” to participants at least once every 12 months – to help people understand and plan for retirement.
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  15. Makes significant changes to “stretch IRAs,” causing many inherited IRAs to terminate after only 10 years after the death of the original IRA owner.
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A summary chart of some of the impact the SECURE Act makes to IRA planning accompanies this commentary. Clients who wish to further discuss the impact on their investments should contact their Commerce Trust Company relationship manage


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About the Author

Tom has managed the East region tax team for Commerce Trust Company since joining in 2012. He is responsible for the services his department provides to clients of Commerce Trust in the St. Louis, Springfield, Belleville, Peoria, and Bloomington offices. In addition to tax planning and consulting services to that client base, his group annually prepares more than 120 returns for charitable trusts and private foundations and more than 350 returns for individual, estate, gift, trust, and partnership clients of Commerce Trust. Tom also co-manages Commerce Trust’s annual tax return preparation process, including reviewing and maintaining Commerce Trust’s accounting system and the integration of this system with the organization’s external vendor. Tom attended Washington University in St. Louis, earning two bachelor of arts degrees in physics and psychology, a juris doctorate, a master of business administration, and a master of science in business administration. He is a member of the Missouri Society of Certified Public Accountants, the American Institute of Certified Public Accountants, the Missouri Bar Association, The Bar Association of Metropolitan St. Louis, the American Association of Attorney-Certified Public Accountants, and the Estate Planning Council of St. Louis. Tom has chaired the audit, investment, and budget subcommittees of the Finance Committee of The Bar Association of Metropolitan St. Louis for several yea

The 2020 investment commentary is a special report designed to provide investment information on economic markets for Commerce Brokerage clients. It is intended to provide general information only and reflects the opinions of Commerce Trust Company’s Investment Policy Committee.

Commerce Trust Company is a division of Commerce Bank. Commerce Brokerage Services, Inc., member FINRA and SIPC, and an SEC registered investment advisor, is a subsidiary of Commerce Bank.

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