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DEVELOPMENT: Reduced Age for In-Service Distributions DEVELOPMENT: Reduced Age for In-Service Distributions

DEVELOPMENT: Reduced Age for In-Service Distributions

A provision in the Further Consolidated Appropriations Act, 2020 ("Appropriations Act"), which also contained the Setting Every Community Up for Retirement Enhancement ("SECURE") Act, reduces the minimum age for permissive in-service distributions from qualified retirement plans and governmental 457(b) plans to age 59½. This change is applicable to plan years beginning after December 31, 2019.

Under prior law, a qualified 401(a) plan may allow in-service distributions at the plan's normal retirement age or age 62. For 457(b) plans, in-service distributions were not permissible until the participant reached age 70½.

A section of the Appropriations Act, referred to as the Bipartisan American Miners Act of 2019, reduces the age for in-service distribution from 62 to 59½ for qualified 401(a) plans. For governmental 457(b) plans, the age for in-service distributions is reduced from age 70½ to age 59½. This change is optional for those plans seeking to reduce the age for in-service distributions.

To discuss the impact of this change on your plan documents or plan administration, please contact Audra Ferguson-Allen, Robert L. Gauss, Tara S. Sciscoe, Christopher Sears, Lisa Harrison, Lindsay Knowles, or the Ice Miller Employee Benefits attorney with whom you most closely work.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader’s specific circumstances.

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