The SECURE Act

[Dave Grubb]

This is a Federal Act that went into effect 01/01/20. There are parts that apply to every adult of any age and others that apply to anyone born after 06/01/1949. All aspects seem to be to our advantage, but you have to take action to get the benefit(s). Here is a synopsis of the Act:

Major Provisions of the SECURE Act
The SECURE Act tweaks a number of rules related to tax-advantaged retirement accounts. Here's what it will do:

Make it easier for small businesses to set up 401(k)s by increasing the cap under which they can automatically enroll workers in “safe harbor” retirement plans, from 10% of wages to 15%.

Provide a maximum tax credit of $500 per year to employers who create a 401(k) or SIMPLE IRA plan with automatic enrollment.

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.

Encourage plan sponsors to include annuities as an option in workplace plans by reducing their liability if the insurer cannot meet its financial obligations.

Push back the age at which retirement plan participants need to take required minimum distributions (RMDs), from 70½ to 72, for those who are not 70½ by the end of 2019.

Allow the use of tax-advantaged 529 accounts for qualified student loan repayments (up to $10,000 annually).

Permit penalty-free withdrawals of $5,000 from 401(k) accounts to defray the costs of having or adopting a child.

Encourage employers to include more annuities in 401(k) plans by removing their fear of legal liability if the annuity provider fails to provide and also not requiring them to choose the lowest-cost plan. (This could be something of a double-edged sword. Employees will need to look extra-carefully as these options.)

Pushing back the required withdrawal age to 72 would have helped me--at least for a couple of years

It would behoove anyone to read this entirely, there is more to it than I posted above. One that does advantage me---and I'm sure more of you, is a provision that allows continued contributions to a traditional IRA after age 70 1/2.

[mgrist]

Yea boy am I glad to see that!