You may have heard that the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019 passed through Congress recently. What’s it all about?
Broadly speaking, the SECURE Act has two major elements. First, the central thrust of the Act creates new ways for retirement plans to exist and improve retirement options for smaller employers, part time workers, and self-driven individuals with IRAs. For example, the SECURE Act allows smaller businesses to get the advantages of a larger-sized retirement plans by expanding the availability of multiple-employer plans (MEPs). If you are the HR director, CFO, or employee advocate for a smaller company with an expensive (or non-existent retirement plan), then you absolutely should take notice of this Act’s passage and how it can improve retirement outcomes for your employees.
What if you are a typical full-time employee with an existing retirement plan through your job? Does this Act mean anything to you? Actually, it does. The Second major element of the SECURE Act updates some of the numbers around retirement including age-limits on IRA contributions, age limits on required minimum distributions, percentage limits on automatic escalation, and so on
The SECURE Act isn’t a comprehensive change of the retirement landscape, but its scope is large, and it adjusts the rules across a variety of fields. We’ve been reading executive summaries of the wide-reaching Act, and it is worth noting that the summary itself is 10 pages long. There is a lot of information to unpack. It’s worth checking in with your advisor or financial planner to see how these changes in the legislation will impact your long-term financial plan.