S.E.C.U.R.E.

A new decade has arrived.  Changes to retirement rules are in effect now that is underway.  A couple of weeks ago, President Donald Trump signed the SECURE Act into law.  No matter your politics, you’ve got to appreciate the acronyms being produced inside the Beltway. This latest legislation is no exception: SECURE = Setting Every Community Up for Retirement Enhancement.

Overall this is not likely to revolutionize retirement strategies, but there are a few things worth noting.  The starting age for required minimum distribution (RMD) is being pushed back by a year-and-a-half to 72 years old.  Additionally, they have removed the maximum contribution age, so those working beyond 70.5 are able to make contributions.  Unfortunately, stretching inherited IRA payouts is no longer available.  Going forward, non-spouse beneficiaries can no longer receive distributions from inherited IRAs over their lifetime; instead these accounts must be fully distributed within 10 years.

There are some changes for employer-sponsored retirement plans as well. Firms will receive a tax credit for offering a plan which automatically enrolls workers.  This incentive is designed to increase employee participation.  Smaller companies now have expanded access to plans that cover multiple employers which allow firms to enjoy an economy of scale currently unavailable.  Long-term part-time workers will also gain access to these plans as the SECURE Act relaxes the minimum number of hours worked before the individual can participate.

These are a few highlights of the SECURE Act.  For those looking for a more complete description, the House Committee on Ways and Means provided this six-page summary of the law.  As 2020 unfolds, Atlas will keep you apprised of anything else we find noteworthy from this Act.