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IRS Notice 2020-68 Provides Guidance on SECURE Act and Miners Act Provisions Affecting Retirement Plans
Practical Law Legal Update w-027-2681 (Approx. 4 pages)
IRS Notice 2020-68 Provides Guidance on SECURE Act and Miners Act Provisions Affecting Retirement Plans
by Practical Law Employee Benefits & Executive Compensation
| Published on 04 Sep 2020 • USA (National/Federal) |
IRS Notice 2020-68 provides guidance on certain provisions under the Setting Every Community Up for Retirement Enhancement Act (SECURE Act) and the Bipartisan Miners Act of 2019 (Miners Act) affecting retirement plans.
On September 2, 2020, the IRS issued Notice 2020-68, which provides guidance on several Setting Every Community Up for Retirement Enhancement Act (SECURE Act) provisions affecting retirement plans, as well as Section 104 of the Bipartisan American Miners Act of 2019 (Miners Act). The Notice also provides guidance on deadlines for plan amendments.
Notice 2020-68
The Further Consolidated Appropriations Act, 2020 (Pub. L. No. 116-94 (Dec. 20, 2019)), which includes the SECURE Act and the Miners Act, was enacted on December 20, 2019 (see Legal Update, Government Funding Legislation Includes the SECURE Act, Which Changes Retirement Plan Requirements and the SECURE Act Compliance Chart).
Notice 2020-68 provides Q&A guidance on SECURE Act Sections:
- 105, which established, under new Code Section 45T (26 U.S.C. § 45T), a credit of $500 under Code Section 38 for small employers that add an automatic enrollment feature to an existing or new plan.
- 107, which repealed the maximum age for contributions to a traditional individual retirement account (IRA) and provides for a gross income exclusion of up to $100,000 for charitable contributions from an IRA.
- 112, which allows long-term, part-time employees to participate in 401(k) plans.
- 113, which allows penalty-free withdrawals of up to $5,000 from 401(k) plans, 403(b) plans, governmental 457(b) plans, and IRAs, following the birth or legal adoption of a child.
- 116, which permits excluded difficulty of care payments to be treated as compensation for determining retirement plan contribution limitations.
Notice 2020-68 provides Q&A guidance on:
- Section 104 of the Miners Act, which lowered the age for in-service distributions from retirement plans from 62 to 59.5.
- The deadline for amending qualified plans, 403(b) plans, governmental 457(b) plans, and IRAs to reflect the SECURE Act and Section 104 of the Miners Act. The Notice references Rev. Procs. 2016-37 and 2019-39, as amended by Rev. Proc. 2020-40 (see Legal Update, IRS Revenue Procedure 2020-40 Provides Extensions of Retirement Plan Amendment Deadlines).
Practical Implications
Sponsors and service providers of pre-approved qualified retirement plans and pre-approved 403(b) plans should review Notice 2020-68 for guidance on implementing certain SECURE Act and Miners Act provisions affecting retirement plans.