The SECURE/CARES/CAA AMENDMENT is to comply with the requirements of the Further Consolidated Appropriations Act, 2020, including the SECURE Act provisions, the Coronavirus, Aid, Relief and Economic Security (CARES) Act, and the Consolidated Appropriations Act, 2021
(CAA).
While on August 4, 2022, the IRS in Notice 2022-33 extended the deadline for retirement plans to adopt the amendments required by the SECURE Act and the CARES Act until December 31, 2025, they may be adopted prior to the 2025 extended deadline.
While most of the new provisions mainly apply to traditional 401k plans (aka full-time employer plans), the following provisions also apply to solo 401k plans.
Qualified Birth and Adoption Distributions (QBADs) under the SECURE Act
The solo 401ki plan participant can withdraw up to $5,000—for each birth or qualifying adoption event—without having to pay the 10% early distribution tax penalty for those under age 59 1/2. This new rule is effective for solo 401k distributions made after December 31, 2019. The following must be satisfied.
- Such distributions must occur within 12 months of the birth or adoption.
- For adoptions, the adoptee must be under age 18 or an individual who is physically or mentally incapable of self-support.
- Amounts withdrawn under this provision may be repaid to the solo 401k plan.
- Married solo 401k participants may each receive a $5,000 distribution for the same birth or adoption
The Treatment of RMDs
Required minimum distributions (RMDS) were waived for 2020. This waiver includes RMDs for individuals who turned age 70 ½ in 2019 and took their first RMD in 2020.
