By: Barry E. Haimo, Esq.
December 12, 2019
What You Should Know About the SECURE Act
Do you know how much you have saved for retirement? And how long that money will last?
More and more Americans are beginning to fear that they will outlive their retirement savings. Unfortunately, many of them are right. More than one in five Americans (22%) have less than $5,000 in their retirement savings.
These fears have made their way to the House of Representatives, which recently voted on the SECURE Act. This bill could help many Americans plan for retirement… if it’s passed.
What Is the SECURE Act?
The SECURE Act, or the Setting Every Community Up for Retirement Enhancement Act – is intended to do exactly what the name says. It includes a handful of different initiatives that expand retirement saving options to part-time employees, small business owners, and more.
In a country that is more politically divided than ever, the SECURE Act offers hope of bipartisan legislation moving forward. The bill did extremely well in the House, passing with a 417-3 vote.
Unfortunately, it is just sitting in the Senate with no plans to move forward to the President. In a recent letter to Mitch McConnell, seven Republican senators urged the Majority Leader to take the next steps with the bill.
What Will Happen If the SECURE Act Is Passed?
The SECURE Act aims to help Americans plan for retirement through a variety of different programs and changes:
- Allowing employers to offer annuities (including FIAs)
- Increasing the cap under which small business owners can automatically enroll workers in “safe harbor” retirement plans (15% rather than 10%)
- Offering tax credits to employers who create 401(k) or SIMPLE IRA plan with automatic enrollment
- Allowing small businesses to set part-time employees up with a 401(k) (provided they work 1,000 hours throughout the year or have three straight years working 500 hours)
- Easing nondiscrimination testing rules for closed defined benefit plans
- Raising the starting age for mandatory IRA withdrawals from 70.5 to 72
- Giving employees the option to receive an annual statement that breaks down their retirement savings into monthly checks (rather than one lump sum)
Without swift action, over 450,000 Americans could lose future pension benefits due to nondiscrimination testing rules. Even more could miss out on the opportunity to open a 401(k) and start saving.
If the SECURE Act is passed, more Americans won’t just have access to retirement savings – they will be able to understand how far these savings will go after they retire.
More Options for Retirement Planning
This bill has not been passed yet. If you believe that the SECURE Act is important for your retirement planning, reach out to Florida senators Rick Scott and Marco Rubio. Tell them to get behind the SECURE Act.
In the meantime, you have options for retirement planning as an employer, employee, or soon-to-be retiree. Proper retirement planning can be done without the SECURE Act – this bill will simply make things easier for all Americans.
Want to learn more about how you can ensure that you won’t outlive your savings? Get in touch with a business and estate planning attorney.
Barry E. Haimo, Esq.
Strategic Planning With Purpose®
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