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What is the SECURE Act?

blog, Financial Planning

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:

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

Season’s Greetings.