SECURE Act - How does this impact your retirement plans?

Major Highlights of the SECURE Act

KEY TAKEAWAYS

• The SECURE Act became law on Dec. 20, 2019.

• The Act pushes back the age at which retirement plan participants need to take required minimum distributions (RMDs), from 70½ to 72, and allows traditional IRA owners to keep making contributions indefinitely provided you have earned income.

• The Act mandates that most non-spouses inheriting IRAs take distributions that end up emptying the account in 10 years. (Exceptions are Spouses, Children under age 10 and disabled Children)

• The Act allows 401(k) plans to offer annuities.

• Allow the use of Tax-advantaged 529 accounts for qualified student loan repayments up to $10000 annually

• Permit penalty-free withdrawals of $5000 from 401(k) plans to defray the costs of having or adopting a child.

• The SECURE Act will make it easier for small business owners to set up “safe harbor” retirement plans from 10% of wages to 15% that are less expensive and easier to administer.

• Provide maximum tax credit of $500 per year to employers who create a 401(k) or SIMPLE IRA plan with automatic enrolment.

• Many part-time workers will be eligible to participate in an employer retirement plan if they have 1000 hours in one year or 500 hours each in the past 3 years.