Q. What are the key changes with the new SECURE act?
A. Changes are coming to retirement rules, following the passage and signing into law of the Setting Every Community Up For Retirement Enhancement Act of 2019 (SECURE Act).
But for most people, there are three general areas addressed in the new law worth considering:
1. Retirement plan access
The new law helps make it easier for more employers, especially smaller ones, to offer 401(k) retirement savings plans. Businesses can get a tax credit to help cover the costs of starting an automatic-enrollment retirement plan. Small businesses can also band together to set up and offer 401(k) plans through a third-party to help them manage fiduciary responsibilities and costs on an easier basis than exists today.If such changes mean your employer will probably start offering a 401(k) plan, you’ll likely want to take advantage of it.
And if you are a business owner, you may want to investigate taking advantage of the law’s provisions as a way of rewarding workers or attracting talent.
2. New age limits for retirement plans
The new law pushes back the age at which you will be required to start withdrawing money from those accounts. It was 70 ½ years of age. But, as the new law takes effect, will be increased to 72 years of age. That means savings can grow longer.
The new law also pushes back the 70 ½-year-old limit on contributing to a traditional IRA to 72.
3. Annuity Considerations
The new law also opens the door for more in the way of annuities to be offered in retirement plans.
Generally, an annuity is a financial contract where, in exchange for a lump-sum payment or a series of payments, the annuity will make payments to you at a future date or series of dates. Annuities tend to appeal to those who may be concerned about outliving their savings and want a guaranteed income stream in retirement.
But annuities can vary widely in type and function. And what is appropriate for one person may not be appropriate for another.
A. Changes are coming to retirement rules, following the passage and signing into law of the Setting Every Community Up For Retirement Enhancement Act of 2019 (SECURE Act).
But for most people, there are three general areas addressed in the new law worth considering:
1. Retirement plan access
The new law helps make it easier for more employers, especially smaller ones, to offer 401(k) retirement savings plans. Businesses can get a tax credit to help cover the costs of starting an automatic-enrollment retirement plan. Small businesses can also band together to set up and offer 401(k) plans through a third-party to help them manage fiduciary responsibilities and costs on an easier basis than exists today.If such changes mean your employer will probably start offering a 401(k) plan, you’ll likely want to take advantage of it.
And if you are a business owner, you may want to investigate taking advantage of the law’s provisions as a way of rewarding workers or attracting talent.
2. New age limits for retirement plans
The new law pushes back the age at which you will be required to start withdrawing money from those accounts. It was 70 ½ years of age. But, as the new law takes effect, will be increased to 72 years of age. That means savings can grow longer.
The new law also pushes back the 70 ½-year-old limit on contributing to a traditional IRA to 72.
3. Annuity Considerations
The new law also opens the door for more in the way of annuities to be offered in retirement plans.
Generally, an annuity is a financial contract where, in exchange for a lump-sum payment or a series of payments, the annuity will make payments to you at a future date or series of dates. Annuities tend to appeal to those who may be concerned about outliving their savings and want a guaranteed income stream in retirement.
But annuities can vary widely in type and function. And what is appropriate for one person may not be appropriate for another.
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