New Tax Provisions – Further Consolidated Appropriations Act, 2020

On Friday, December 20, 2019, the President signed the Further Consolidated Appropriations Act, 2020 which addresses several tax provisions such as retirement plan funding and distribution reform, items related to tax extender provisions and disaster tax relief. Some of the highlights include but are not limited to:

• The start date for required minimum distributions is now the year in which the owner turns Age 72 rather than Age 70 1/2.
• The Act extends the 70 1/2 age limit for contributions to IRAs.
• The distribution period for non spouse inherited IRAs is now shortened to a 10 year maximum. The old rule allowed permitted beneficiaries to stretch the distribution period over their life expectancy.
• There is now a requirement for 401(k) plans to offer participation to part time employees who meet certain criteria.
• A new tax credit is allowed for small employers using auto enrollment plans.
• The Act allows for the reduction of the adjusted gross income floor for medical and dental expense deduction from 10% to 7.5%.
• There is now a deduction for tuition and fees paid by taxpayers whose income is below certain IRS limits.
• The treatment of mortgage insurance premiums is now deductible as qualified residence interest subject to income level phaseouts.
• The Act extends most energy credits.
• Qualified principal residence indebtedness can be excluded from gross income.