SECURE Act – Setting Every Community Up for Retirement Enhancement Act of 2019

Setting Every Community Up for Retirement Enhancement Act of 2019

Bipartisan bill aimed at making it easier for Americans to save for retirement.

The Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act) is on the fast track to becoming a law. This bill, which was approved unanimously by the House Ways and Means Committee, could grant access to retirement plans for approximately 700,000 Americans who have never before participated in employer-sponsored retirement plans. This bill will make it easier for small businesses to offer retirement plans to employees. Paired with a similar bill currently in the Senate called the Retirement Enhancement and Savings Act (RESA), the SECURE Act incentivizes employers to start up a retirement savings plan by increasing their retirement plan tax credit and encourages automatic enrollment of employees by offering an additional tax credit for this feature. Under this bill, it would allow long-term, part-time employees who generally have not had the opportunity to participate in retirement savings plan to enroll.

A Bump in RMD Age - Indefinite IRA Contributions - Expanded 529 Plan Coverage 

As Americans are living longer and working longer, the SECURE Act would increase the Required Minimum Distribution age to 72, up from the current age of 70½. It also repeals the minimum cutoff age for contributions to traditional IRAs, allowing individuals with earned income to contribute indefinitely. The measure aims to prevent Americans from slipping into poverty as they age.

Penalty-free (but not tax free) withdrawals will be permitted for births and adoptions. The act will prohibit credit card-based loans from retirement accounts, which will help prevent the drawing down on accounts before retirement age. A bonus is that the SECURE Act will partially pay for itself by raising tax revenue by requiring most recipients (with the exception of spouses and minor children) of inherited IRAs and other retirement plans to begin taking distributions and to completely draw down on the account within 10 years of the death of the original owner.

The SECURE Act also makes some adjustments to 529 plans. They will expand to cover the costs of apprenticeship programs, homeschooling, and will even allow graduates to use leftover funds for student loan repayment.

The new retirement bill has gained support from financial industry trade associations including the Securities Industry and Financial Markets Associates, the American Council of Life Insurers, and the National Association of Insurance and Financial Advisors.  The bill will soon hit the floor for a vote by the House. It appears to have bipartisan support in the Senate as well. “The way it passed…in the committee is a big step forward to seeing a bill get enacted in both chambers this year,” noted Paul Richman, who is the chief government and political affairs officer at the Insured Retirement Institute. If the SECURE Act is passed, it will establish the most significant changes to retirement plans in over 10 years.

Sources:

Bauer, Elizabeth. “Will the SECURE Act Make Your Retirement More Secure?” Forbes, Forbes Media, LLC., 3 Apr 2019, https://www.forbes.com/sites/sap/2019/04/17/will-chatbots-artificial-intelligence-and-machine-learning-take-the-work-out-of-work/#6357857f3476.

Schoeff, Mark Jr. “Massive retirement bill advances.” InvestmentNews 8-12 Apr. 2019: 3, 24. Print

Waddell, Melanie. “Ed Slott: 6 Key Areas to Watch in Retirement Bills.” ThinkAdvisor, ALM Media Properties, LLC., 12 Apr 2019, https://www.thinkadvisor.com/2019/04/12/ed-slott-6-key-areas-to-watch-in-retirement-bills/?slreturn=20190316154220.

Braun-Bostich & Associates, Inc.


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