Congress recently passed sweeping legislation known as the Setting Up Every Community for Retirement
Enhancement (SECURE) Act. The Act expands opportunities for individuals to increase their savings and modifies many employer requirements as so to incentivize businesses to encourage their employees to save for retirement sooner. Many of the provisions are in effect for 2020, so now is the time to consider how these new rules affect you. Below are some of the more important elements that impact individuals and businesses.
Individuals
Raises the required minimum distribution age from 70 ½ to 72
Allows contributions to an IRA after age 70 ½
Permits tax free distributions from a 529 plan to repay up to $10,000 of student loan debt
Allows penalty free withdrawals from a 401(k) to help offset costs of having or adopting a child
Requires distributions from an inherited IRA to most non-spouse beneficiaries be done within 10 years following the IRA owner’s death
Businesses
Permits unrelated employers to band together to create a single retirement plan
Increases the credit for small employer pension plan start-up costs
Creates a new tax credit of up to $500 per year for small employers to offset costs for new 401(k) and SIMPLE IRA plans
Requires most employers to allow long-term part-time employees to participate in 401(k) plans
Increases penalties for failure to file retirement plan returns
The government recognizes that most Americans are not prepared for retirement. Thankfully, most of these changes will allow people more time to save for retirement, as well as provide more options for saving.
However, not every provision is favorable to all and some will impact taxpayers more than others. Let us help you identify which parts of the Act can benefit you and assist you in implementing them into your plan for the
future.
