On December 20, 2019 the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019 was enacted. The bill is designed to aid Americans’ ability to save for retirement. The majority of the SECURE Act provisions take effect in 2020, although some took effect on the date the SECURE Act was signed, and several have retroactive effect.
Some of the key SECURE Act changes:
- Long-service part-time employees must be allowed to participate in 401(k) plans
- Raises the required minimum distributions (RMD) age to 72 from 70 ½
- Eliminated the Age limit (70 ½) for traditional IRA contributions
- Allows penalty-free withdrawals up to $5,000 from retirement plans for the birth or adoption of a child
- Requires lifetime income disclosures be provided to participants at least annually
- In-service distributions from defined-benefit plans and government 457(b) plans can be taken as early as age 59 ½ rather than starting at age 62
- The Act mandates that most non-spouse inheriting IRAs take distributions that end up emptying the account in 10 years
- The act allows 401(k) plans to offer annuities
- Provides a maximum tax credit of $500 per year to employers who create a 401(k) or SIMPLE IRA plan with automatic enrollment.
- Allow the use of tax-advantaged 529 accounts for qualified student loan repayments (up to $10,000 annually)
If you have any questions about the SECURE Act or retirement planning, your plan as an employer or employee or the laws regarding retirements plans, please don’t hesitate to contact us.