The SECURE Act and What It Could Mean for Your Retirement Planning

By Ric Edelman

The SECURE Act (short for Setting Every Community Up for Retirement Enhancement Act) was signed into law by President Trump. It went into effect on Jan. 1.

The SECURE Act is the most significant piece of retirement legislation since 2006 and will make it easier for tens of millions of hardworking Americans to save for retirement!
 
The fact that this Congress — gridlocked on virtually every subject, with massive levels of animosity over pretty much everything — was able to pass this legislation shows how much bipartisan support there is for improving retirement security for all Americans.
 
Here are the law’s major changes:
  • Required minimum distributions must now begin at age 72, up from 70½. (This doesn’t apply to those already age 70½.)
  • If you’re still working at age 70, you can continue contributing to an Individual Retirement Account
  • It’s now easier and cheaper for small employers to offer retirement plans. So if you work for a small company without a 401(k) plan, your employer might create one in 2020.
  • Part-time workers will now be able to participate in their employer’s retirement plan.
  • Companies will be able to auto-enroll new employees into a 401(k) plan with contribution rates up to 15 percent of salary (up from 10 percent previously).
  • Parents under age 59½ who give birth or adopt a child can withdraw up to $5,000 from their retirement accounts without paying a 10 percent IRS penalty. (Taxes will still be due on the withdrawal.)
  • Children who inherit IRAs from a parent must now take all distributions within 10 years, instead of over the heir’s lifetime.

All this means you have new opportunities to improve your retirement planning.

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Ric Edelman is host of The Ric Edelman radio program. 

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