What is the SECURE Act?

jacobted blog, Financial Planning Leave a Comment

President Trump is expected to sign into law the Setting Every Community Up for Retirement Enhancement (SECURE) act as part of the massive year-end spending bill passed by Congress. Below are the salient points:

  • Removal of the age limit for contributing to IRA plans.
    • The current law prohibits contributions to anyone over 70 ½ years.
    • The proposed law allows anyone 70 ½ or older to contribute to a traditional IRA so long as they have reported income
  • Small companies can ban together and offer a 401(K) plan
    • Will receive tax credits for implementing automatic enrollment.
      • Opt out vs. opt in.
    • Part time employees who work 500 hours a year for three consecutive years or 1,000 hours for one year must be included
  • Required minimum distribution (RMD) age
    • Current law required RMD to start at 70 ½
    • The proposed law will raise the age to 72
  • Retirement plans are encouraged to include products that provide annual income like defined benefit plans
    • Annuities are now permissible investment vehicles
    • Insurers, not employers are responsible for providing annuity products
  • Stretch Plans will be phased out
    • Under current law, anyone who inherits an IRA can spread out their RMD over their expected lifetime
    • The new law requires all RMD’s must be taken within 10 years
      • Exclusion is available to
        • Spouses
        • Beneficiary when their birthday is within 10 years of the deceased
        • Minors
        • Those with disabilities
    • This is a tax / estate planning nightmare

Here is a link to an article: https://money.com/what-serure-act-retirement-law-means-for-you/

Let’s talk about what this may mean to your financial plan.

Season’s Greetings.

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