Understanding The SECURE Act, Part 1

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Recently passed through the House, the SECURE Act has a lot of new retirement implications. You’ll want to hear the next two episodes of the podcast as we break down the act in a two-part series. We’ll cover what this might mean for your retirement plan.

Click the timestamps below to jump ahead in the episode…

Confidence Corner

[1:34] All about the SECURE Act of 2019

  • First major retirement legislation since 2006.
  • SECURE Act stands for “Setting Every Community Up for Retirement Enhancement” Act.
  • Passed through the House but still has to go through the Senate.

[4:42] Small business retirement plans

  • Title 1, Section 101 will help small business employers to increase access to retirement plans.
  • The majority of Americans are employed by small business owners. It will give the employer tax benefits.
  • For small companies, 401(k) costs are big, so this will help incentivize small business owners. To do this, businesses will be lumped together potentially to the share the cost of a retirement plan.

[7:56] Increased annuity options inside retirement plans

  • A lot of 401(k)s allow annuitization options when you retire in order to turn your 401(k) into a pension. This will be a required option inside the 401(k)s to provide a guaranteed number.

[10:29] Increasing the RMD age

  • This is what is gaining the most publicity. Right now, you have to take required monthly distributions at age 70 and a half. Under this bill, that will increase to 72 years old.
  • People are living longer, so this may help spread the distributions out.
  • For a lot of people, Nathan doesn’t feel like this will make enough of a difference. If people need to take these distributions earlier anyway, then it’s not as big of a benefit.

[15:01] Removing age limitations on IRA contributions

  • Right now, you cannot contribute to an IRA after age 70 and a half due to RMDs.
  • If you are still working, you can continue to contribute to a 401(k) or a Roth.

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