On December 20th, 2019, new legislation was signed into law as part of a larger government spending package that promises to have wide ranging and lasting effect on saving for retirement. Called the Setting Every Community Up for Retirement Enhancement (SECURE) Act, the legislation includes many long-sought common-sense reforms that could make retirement saving both easier and more attainable for many Americans.
Most provisions in the law already went into effect on January 1st, 2020. The most notable policy changes will alter rules around defined contribution plans (like 401(k)s), defined benefit pension plans, individual retirement accounts (IRAs), and 529 college savings accounts.
Though the particulars of the law are wide-ranging and can be intricate, some of the key takeaways of the bill include:
- Extending the current required minimum distribution requirements to age 72
- Allowing parents to withdraw up to $10,000 from 529 plans to repay student loans
- Providing protection to unrelated employers to join a pooled employer plan
- Giving business owners more flexibility to help guide their decision-making
- Allowing long-term, part-time workers to participate in 401(k) plans
- Modifying the nondiscrimination rules to protect longer-service participants
- Increasing the small employer pension plan startup tax credit up to $5,000
- Simplifying the 401(k) safe harbor rules
- Allowing plans adopted by the filing due date to be treated as in effect as of the close of the year
- Requiring disclosures regarding lifetime income
- Expanding portability of lifetime income options
- Providing a fiduciary safe harbor for selection of a lifetime income provider
- Modifying the treatment of custodial accounts on termination of 403(b) plans
If you have any thoughts or questions on how your retirement savings plans might be affected or wish to take a deeper dive into the particulars, we’d love to discuss the details and possibilities. Such changes in the tax code represent a good time to revisit and reassess your financial circumstances and long-term strategies.