Four Ways the Newly-Released SECURE Act Will Affect Your Retirement


President Trump recently signed into effect one of the most dynamic transformations to retirement planning in recent years. The SECURE Act, or the Setting Every Community Up for Retirement Enhancement Act, creates numerous provisions to fortify retirement security across America. In this blog, we summarize a few significant changes the law will have on retirement plans.

  • Part-Time Workers Can Now Participate in 401(k)

In the past, employers could exclude part-time employees from participating in retirement plans. Under the newly-enacted legislation, plans must now be extended to workers who have accumulated at least 500 hours for three consecutive years or at least 1,000 hours for one year. However, as of right now, employers are not required to make profit-sharing or matching contributions to part-time workers.

  • You Can Now Contribute to Your Traditional IRA After Age 70 ½

As the life expectancy rate in the country continues to soar, more and more Americans are working well past retirement age in order to fund a longer, more comfortable retirement.  At the start of the 2020 tax year, if employees have earned income, the novel law allows workers to add to their traditional IRA even after they turn 70 ½. The SECURE Act now raises the RMD beginning age from 70 ½ to 72 for IRAs and employer sponsored plans. What’s more, those who do not need funds from either their IRAs or employer sponsored retirement plans are granted a surplus period of tax-deferred prosperity. It’s important to note this change only applies to those who were not 70 ½ by December 31, 2019.

  • Multiple Employer Plans for Small Businesses

In the past, if companies did not meet the desired requirements for a multiple employer plans, the plan would collapse for all parties involved. However, under the new SECURE Act, employers are not obligated to share a “common characteristic” with other businesses, such as operating in the same industry. The SECURE Act has opened the door for more employers to participate in multiple employer plans and enjoy additional features at a reasonable cost.

  • Tax Credits Are Given with Auto-Enrollment

For employers who automatically enroll their employees into their retirement plans, the SECURE Act now grants small employers a tax credit to offset the costs of starting a SIMPLE IRA plan or 401(k) plan with auto-enrollment, in addition the start-up tax credit they already collect.

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