What is the SECURE Act and how will it affect your retirement?

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The Setting Every Community Up for Retirement Enhancement Act of 2019, better known as the SECURE Act.

Congress just agreed to a bipartisan appropriations bill that will help avert another government shutdown. Attached to the spending bill is a piece of legislation called the Setting Every Community Up for Retirement Enhancement Act (SECURE).  This bill passed the House earlier this summer with a 417-3 vote.  Now it has passed the Senate, and is expected to be signed by the President by 1-1-2020.

While the Act has numerous provisions, here are just a few:

1.       Removal of the RMD provisions for stretch IRA’s.  Many beneficiaries will have to take all RMD’s by the end of year 10 after an account holder dies.

2.       The bill eases the way for annuities to be included in 401 (k)’s; a huge win for the insurance industry.

3.       The Act allows those working past 70.5 to contribute to IRA’s, which matches the rules for 401(k)’s and Roth IRA’s.

4.       The Act pushed out the date to start RMD’s till age 72, but this only applies to those who did nor attain age 70.5 by the end of 2019.

5.       The bill allows small employers to come together to set up and offer 401(k) plans with less fiduciary liability concern and less cost than exists today.

6.       There is a small tax credit of $500 to help some smaller employers encourage automatic enrollment into their retirement plan.

7.       Penalty free distributions for birth of a child or adoption.