What is the SECURE Act?
On December 19, 2019, the President signed the SECURE Act. The SECURE Act stands for Setting Every Community Up for Retirement Enhancement and is a bill that includes significant provisions aimed at increasing access to tax-advantaged accounts and preventing older Americans from outliving their assets.
The most important points of the SECURE Act are:
- The Act will make it easier for small business owners to set up “safe harbor” retirement plans that are less expensive and easier to administer.
- Many part-time workers will be eligible to participate in an employer retirement plan.
- The Act pushes back the age at which retirement plan participants need to take RMDs from 70 1/2 to 72 and allows traditional IRA owners to keep making contributions indefinitely.
- The Act does mandate that most non-spouses inheriting IRAs take distributions that end up emptying the account in 10 years.
- The Act allows 401(k) plans to offer annuities.
- The Act will provide a maximum credit of $500 per year to employers who create a 401(k) or SIMPLE IRA plan with automatic enrollment.
- The Act will enable businesses to sign up part-time employees who work either 1,000 hours throughout the year or have three consecutive years with 500 hours of service.
- The Act will allow the use of tax-advantaged 529 plan accounts for qualified student loan repayments (up to $10,000 annually).
- The Act will permit penalty-free withdrawals of $5,000 from 401(k) accounts to defray the costs of having or adopting a child.
For more information regarding the SECURE Act, contact one of our knowledgeable staff members today.