By Generational Wealth AdvisorsFeb 27, 2020, 05:00 et
The SECURE Act of 2019 (Setting Every Community Up for Retirement Enhancement) was signed into law as part of a government funding package on December 20, 2019, with overwhelming bipartisan support. The SECURE Act is the most comprehensive retirement savings package to become law since the Pension Protection Act of 2006.
The SECURE Act is wide-ranging, spanning nearly 40 provisions. The Act seeks to improve access to employer sponsored retirement savings plans, increase savings levels within plans, streamline administration of plans, and provide for a wider range of options for generating retirement income, such as annuities.
Changes to IRAs and retirement plans
Increase the mandatory RMD age: Required minimum distributions (RMDs) will begin in the year after an individual turns 72, up from the current 701⁄2. Effective in 2020 for those who attain age 701⁄2 in 2020 or later.
Remove the age limit for traditional IRA contributions: Non-rollover contributions to traditional IRAs are permitted after age 701⁄2, similar to Roth IRA contributions. Effective in 2020 for contributions made for 2020 or later.
Inherited IRA and defined contribution plan distribution requirements: The balances of inherited IRAs and inherited defined contribution plan accounts are required to be distributed by the end of the tenth year after the IRA owner or plan participant dies, with exceptions for certain types of beneficiaries, including spouses and minor children, who are still permitted to take distributions over their life expectancy. Generally effective for deaths in 2020 or later.
Increase to the auto enrollment safe harbor cap: The cap on auto escalation of employee deferrals is raised from 10% to 15% for employees enrolled through auto enrollment under certain automatic enrollment safe harbor plans. Effective in 2020.
New baby withdrawals: Withdrawals of up to $5,000 from IRAs or employer plans in the year following the birth or adoption of a child may be allowed. The 10% early withdrawal penalty tax would not be assessed. Similar to rollover contributions, the funds could be recontributed at a later date. Effective in 2020.
Access for long-term part-time workers: 401(k) plans are required to include employees who work 500 hours or more per year for three consecutive years for purposes of making elective deferrals, although employer matches are not required. These employees also receive vesting service credit. Effective in 2021, though service prior to 2021 need not be counted, so impact to employees unlikely to begin before 2024.
Lifetime income disclosure: On an annual basis, 401(k) account balances are required to be translated into a monthly annuity payment on participant disclosures. Effective 12 months after the Department of Labor finalizes the rules around permissible assumptions for the calculation of monthly annuity payments.
Changes to 529s
New uses for 529 plans: 529 plans can be used to pay for apprenticeship program expenses and as much as $10,000 over a person’s lifetime for student loan payments. Effective for all distributions beginning in 2019.
Increased availability of annuities within retirement plans
Annuity provider selection safe harbor: Plan sponsors are allowed to rely on written representations from insurers for purposes of conducting periodic reviews and for the insurer’s status under state insurance laws for the purpose of considering the insurers’ financial status. Effective upon the law’s enactment.
Annuity portability: Lifetime income investments can be transferred among retirement plans when the option is no longer authorized by the original plan. Effective in 2020.
Changes to retirement plan administration
Streamlined plan administration: The annual safe harbor notice requirement for plans designed to avoid nondiscrimination testing is eliminated for plans that satisfy the safe harbors by using non-elective contributions. In addition, non-elective safe harbor contributions can be added to a plan mid-year provided certain conditions are met. Finally, plans that have the same trustee, named fiduciary, and investment options can file a single Form 5500. Effective in 2020.
Incentives for small employers: Employers with fewer than 100 employees can receive a 50% tax credit for retirement plan startup costs as high as $5,000, up from the current $500 cap. Also, small employers can receive a credit of up to $500 per year for up to three years for including automatic enrollment in their plans. Effective in 2020.
Expansion of MEPs
Open Multiple Employer Plans (MEPs): Unrelated employers can join together to create retirement plans administered by a third party. MEPs allow smaller employers to benefit from economies of scale and strengthen their negotiating position with plan providers. MEPs can work through a pooled plan provider (PPP) that would be named the fiduciary and plan administrator and would be subject to registration, examination, audit, and investigation by the Departments of Treasury and Labor. Effective in 2021.
“One bad apple” relief: MEPs will not be treated as failing if one employer does not meet its obligations to the plan. Effective in 2021.
All investing is subject to risk, including possible loss of principal.
The information we learn from customers helps us personalize and continually improve your experience. Here are the types of information we gather.
We receive and store any information you enter on our Web site or give us in any other way. We do not sell or rent your personal information to others without your consent. We use the information we collect only for the purposes sending promotional information, enhancing the operation of our site, serving advertisements, for statistical purposes and to administer our systems. We DO NOT use third parties to provide customer service, to serve site content, to serve the advertisements you see on our site, to conduct surveys, to help administer promotional emails, or to administer drawings or contests, but reserve the right to do so in the future without advance notice.
Generational Capital Markets, Inc.’s affiliates are all part of one corporate family, they work with one another and may work together to provide services to you. The sharing of your information among affiliates enables Generational Capital Markets to serve you more efficiently and makes it more convenient for you to do business with Generational Group. Generational Capital Markets is permitted by law to share information with its affiliates. All of our affiliates follow similar privacy policies.
For reasons such as improving personalization of our service, we might receive information about you from other sources and add it to our account information.
Generational Group may license the use of its intellectual property including but not limited to its name, likeness, and logo for the use of affiliated offices. Such affiliated offices may not be owned, controlled, managed, supervised or staffed by employees, officers, or agents of Generational Group. Affiliated offices may be independently owned and operated. For more information about a particular office, please contact Generational Group at its office in Dallas, Texas.
This page may contain other proprietary notices and copyright information, the terms of which must be observed and followed.
Information on this web site may contain technical inaccuracies or typographical errors. Information may be changed or updated without notice. Generational Group may also make improvements and/or changes in the products and/or the programs described in this information at any time without notice.
Generational Group does not want to receive confidential or proprietary information from you through our web site. Please note that any information or material sent to Generational Group will be deemed NOT to be confidential. By sending Generational Group any information or material, you grant Generational Group an unrestricted, irrevocable license to use, reproduce, display, perform, modify, transmit and distribute those materials or information, and you also agree that Generational Group is free to use any ideas, concepts, know-how or techniques that you send us for any purpose.
Our computer system protects personal information using advanced firewall technology.
Information Generational Group publishes on the World Wide Web may contain references or cross references to other products, programs and services that are not announced or available in your country. Such references do not imply that Generational Group intends to announce such products, programs or services in your country. Consult a Generational Group representative for information regarding the products, programs and services which may be available to you.
Generational Group makes no representations whatsoever about any other web site which you may access through this one. When you access a non-Generational Group web site, please understand that it is independent from Generational Group, and that Generational Group has no control over the content on that web site. In addition, a link to a non-Generational Group web site does not mean that Generational Group endorses or accepts any responsibility for the content, or the use, of such web site. It is up to you to take precautions to ensure that whatever you select for your use is free of such items as viruses, worms, Trojan horses and other items of a destructive nature.
IN NO EVENT WILL Generational Group BE LIABLE TO ANY PARTY OR ANY DIRECT, INDIRECT, SPECIAL OR OTHER CONSEQUENTIAL DAMAGES FOR ANY USE OF THIS WEBSITE, OR ON ANY OTHER HYPERLINKED WEBSITE, INCLUDING, WITHOUT LIMITATION, ANY LOST PROFITS, BUSINESS INTERRUPTION, LOSS OF PROGRAMS OR OTHER DATA ON YOUR INFORMATION HANDLING SYSTEM OR OTHERWISE, EVEN IF WE ARE EXPRESSLY ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
Generational Capital Markets, Inc. ("GCM"), member FINRA/SIPC, is wholly owned by Generational Capital, LLC ("GC"). Both GCM and GC are affiliated with Generational Equity, LLC; and all part of the Generational Group of companies. This website is solely for general informational purposes and is not guaranteed by us to be accurate and complete statements of fact and should not be relied on as such. Opinions in this website constitute the current judgment of the author as of the date and its last update. The content of this website does not necessarily reflect the opinions of GCM, and is subject to change without notice, and GCM is not under any obligation to update or keep current any information contained herein. This website does not constitute any personal recommendations and does not take into account the specific investment objectives, financial situation or particular needs of the reader. The information contained in this website should not be construed as an offer, or a solicitation of an offer, to buy or sell any securities or other financial investments. The information presented should not and cannot be viewed as an indicator of future performance. To the extent permitted by law, GCM does not accept any liability arising from the use or retransmission of the information in this website.
Furthermore, all information contained within this website is the property of Generational Group.
Honored to win Investment Banking Firm of the Year 3 years running.
Over 50 awards and counting.
Sign up to receive regular email updates, industry-leading insights and details on complimentary M&A executive conferences in your area from our award-winning team
Success, you have been added to our list.