How The SECURE Act Makes You More Secure
When it comes to providing more people with the ability to save for retirement , the SECURE Act ushers in a lot of rule changes for employers and employees alike . Below are four key provisions employers should be aware of , as well as four key provisions that will benefit individuals under the SECURE Act . Read the article on page 3 or visit www . reacpa . com / secureact-changes to learn more .
The SECURE Act helps employers :
• Higher Tax Credit : The SECURE Act makes it easier and less expensive to establish a retirement plan .
• Increased Accessibility : Employers can now allow long-term part-time employees to make salary deferrals as long as they meet certain criteria .
• Automatic Escalation Cap Rises : Employers can now opt to automatically increase the amount their employees defer from their paychecks to 15 % – up from 10 %. Auto-escalation might also earn employers an additional annual $ 500 tax credit for three years .
• Last Minute Plans Welcome : For plan years 2020 and beyond , employers now have up until their tax filing deadline , plus extension , to adopt a qualified retirement plan .
The SECURE Act helps individuals :
• Defer Your RMDs : Beginning in tax year 2020 , the age to start Required Minimum Distributions increases from age 70½ to 72 .*
• Work Longer , Save Longer : Individuals older than 70½ can continue making contributions to a Traditional IRA .
• Inheritance Deadline : Per the new law , inherited IRAs must be emptied by the 10 th calendar year following the year of death of the IRA owner or plan participant .**
• Birth & Adoption Assistance : Individuals may receive early ( pre-59½ ) plan distributions for childbirth or adoption expenses up to $ 5,000 .
* Does not affect individuals who turned age 70½ on or before Dec . 31 , 2019 .
** This change is effective for plan participants and IRA owners who passed away after Dec . 31 , 2019 , and does not affect existing inherited IRAs and does not apply to certain eligible beneficiaries , including the spouse and minor children of the account owner , chronically ill or disabled individuals and individuals not more than 10 years younger than the IRA owner .
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