5 Ways the Secure Act Would Affect Retirement, 529 Plans

"Biggest benefit here may simply be that people actually understand when they turn 72 years of age," he continued. "So knowing when RMDs start is about to get easier. Of course, we'll still have to deal w/ age 59 1/2, so for those already feeling nostalgic about half Bdays, there's that."

(In general, IRA owners must wait until age 59 1/2 to withdraw IRA funds without paying the 10% early distribution penalty.) 

As Levine noted Tuesday: "Upon re-reading Section 114 of SECURE Act, it's clear if you're 70 1/2 this year, the "new" RMD rules don't apply to you. You're 'stuck' w/ RMDs for this year and next!"

3. Good News for Traditional IRAs

"OK, now something else that's kinda nice… Section 107 of SECURE repeals maximum age for making a Traditional IRA contribution. This makes a ton of sense b/c: – More people are working past 70 (it's about 30%) – The TIRA is the ONLY retirment acct w/ such a restriction," Levine tweeted.

The SECURE Act does include an anti-abuse provision to reduce qualified charitable distributions (QCDs) by the amount of the traditional IRA deduction received after age 70½, he points out.

4. Time for MEPs?

Multiple employer plans combine different businesses into one plan. 

But the IRS has imposed a "one bad apple" rule on them, according to Levine.

This meant that if any one employer within the MEP failed to meet its requirements to qualify for the plan, then the entire plan could be disqualified.

"Now, however, we're going to have truly open MEPs. And THIS is where it can get SUPER-cool for advisors…," Levine tweeted. 

Also notable is the Secure Act's elimination of the nexus requirement, which was loosened earlier this year, he points out. The nexus rule stipulated that members of a MEP had to have common interests in addition to participation in the retirement savings plan.

"Imagine building your own super-tricked-out, low-cost, bad-ass 401(k) that you can offer to any biz you work w/ (or that wants to work w/ you). You can have 1 big MEP for everyone! Streamlines things for advisors, which SHOULD lead to cost efficiencies for end-clients," he explained.

5. 529 Plan Updates

On the 529 savings plan front: "The big change here is that up to $10,000 of 529 plan money can be used to pay off student debt. The $10k is, unfortunately, a lifetime amount, and NOT an annual limit. But, an additional $10k can be used to pay off student debt for each of the 529 plan [beneficiaries'] siblings!" he explained.

There's no double dipping, the CFP points out. This means that if 529 plan money is used to pay down student debt interest, the interest doesn't qualify for an "above-the-line" deduction. Also, apprenticeship programs are being added to the list of institutions able to take 529 funds, if they are registered with the Labor Department.

— Related on ThinkAdvisor:

• House Passes Secure Act With Year-End Spending Bill
• IRS Weighs In on RMDs, Fees
• IRS Seeks to Adjust RMDs for Longer Lives
• WSJ Editorial on Secure Act's 'Stretch IRA' Provision Sparks Debate
• Ed Slott: The Pros and Cons of Annuities in Retirement Plans