Tax/Budget Legislation Enacted With Retirement Effects

December 21, 2015 – President Obama signed into law H.R. 2029 on December 18, 2015, which is combined tax extender and federal budget legislation. (See the “Retirement Spotlight” article posted to our newsroom here for details.)

 

Briefly, this legislation does the following.

 

  • The IRA qualified charitable distribution (QCD) option is extended for 2015 and is made permanent.
  • Rollovers to savings incentive match plan for employees of small employers (SIMPLE) IRAs from non-Roth IRAs, qualified retirement plans, IRC Sec. 403(b) plans, and governmental 457(b) plans will be permitted after the initial SIMPLE IRA two-year period. This is effective on the date of enactment (December 18, 2015).
  • Airline bankruptcy settlement payments eligible for rollover to IRAs will now include settlements occurring within the 180-day period beginning on the date of enactment (December 18, 2015).
  • The definition of “qualified public safety employee” for purposes of the age-50 exemption from the 10 percent additional tax on early distributions from governmental retirement plans has been expanded to include nuclear materials couriers, U.S. Capitol police, Supreme Court police, and diplomatic security special agents. This is effective for distributions after December 31, 2015.
  • The legislation creates a Form 1099-series safe harbor for de minimis errors. An error of $100 or less on the amount of a distribution or an error of $25 or less on a withholding amount does not need to be corrected by issuing a revised Form 1099-R, 1099-SA, or 1099-Q, unless requested by the taxpayer. This change applies to forms required to be filed after December 31, 2016 (2016 and later tax year forms).
  • Computer technology and equipment is a qualified higher education expense for Coverdell education savings account (ESAs) distributions. This is effective for distributions made after December 31, 2014. (Such computer expenses already were qualified elementary and secondary expenses for ESA distributions.)