Tax and Retirement Plan Changes for 2020
The new decade brings new tax legislation. At the end of 2019, the House and Senate passed the Consolidated Appropriations Act, 2020. There are a number of tax law changes in the bill, along with major shifts for retirement plans. Below is a top-line of the items that will affect many taxpayers. For a more in-depth look at the full scope of the Consolidated Appropriations Act and the SECURE Act, click here.
Top 5 Changes for Individuals:
1. Medical limit has been reduced back to 7.5%.
2. Mortgage Insurance Premiums (PMI) have been reinstated as deductible qualified residence interest.
3. COD income from Qualified Mortgage Debt can once again be excluded.
4. “Kiddie Tax” is no longer computed at Trust and Estate rates.
5. Reduction in the adjusted gross income (AGI) floor for medical and dental expense reductions from 10% to 7.5%.
Top 5 Changes Regarding Retirement Distribution:
1. The start date for Required Minimum Distributions (RMDs) has been shifted to the year in which the owner turns 72.
2. 70 ½ is no longer the age limit for contributions an IRA.
3. The distribution period for non-spouse inherited IRAs has been shortened to a 10-year maximum.
4. There’s a new tax credit for small employers using auto-enrollment plans.
5. Plans are required to offer participation to long-term, part-time employees.
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