On Dec. 20, 2019, President Trump signed the Setting Every Community Up for Retirement Enhancement (SECURE) Act into law. The Act, which took effect Jan. 1, 2020, makes sweeping changes to rules applicable to certain employer sponsored tax-deferred defined contribution (qualified) plans and to traditional IRAs. In addition, the Act includes a number of other tax provisions including expanding the scope of Qualified Education Expenses for 529 plans, extending certain tax provisions that were scheduled to sunset, restoring the pre-Tax Cuts and Jobs Act “kiddie tax” rates (back to the parent’s marginal rate), providing increased tax credits for employers who offer qualified retirement plans for their employees, extending 401(k) plan eligibility to certain part-time workers, and many other tax provisions. This article will focus on the impact of the Act on qualified and non-qualified annuities.  

Because IRAs and employer-sponsored defined contribution plans (such as 401(k)s, 403(b)s, and SEPs), may be funded with qualified annuities, the same rules applicable to traditional IRA and defined contribution plan accounts that hold investment assets other than annuities (such as mutual funds, stocks and bonds, etc.), are also applicable to qualified annuities. In addition, as discussed below, the SECURE Act adds provisions designed to facilitate the offering of annuities as an investment choice in employer-sponsored qualified plans. 

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