The SECURE Act: Setting Every Community Up for Retirement Enhancement

The SECURE Act may bring significant changes to regulations over retirement savings plans. By making it easier for companies, especially small businesses, to offer retirement plans, participants will be able to ensure a steady income beyond their working years.

With an overwhelmingly strong approval from the House of Representatives last Thursday, many are hopeful that changes are on the horizon.

Here are some of the changes that will take place under the SECURE Act:

Tax credits for new plans will increase from the current cap of $500 to $5,000, and up to $5,500 for plans that use automatic enrollment.
Multi-employer retirement plans, where two or more employers band together, will be more feasible.
Safe harbor nonelective contributions will have greater flexibility
- Notice requirement is eliminated
- Elections of a safe harbor can be made up to 30 days before the year ends and up to the March 15th refund deadline if you give employees 4%
Long-term part-time workers will be allowed to participate in 401(k) plans
- If a part-timer works at least 500 hours for 3 consecutive years, the part-timer is pulled in. Currently, the requirement is 1,000 hours in a 12-month period.
- If a part-timer enters under this rule, he/she can be excluded from testing and top-heavy
Most individuals are required to start taking a required minimum distribution (RMD) from their retirement account once they reach a certain age. Under the SECURE Act, the RMD age for retirement accounts will increase from 70 ½ to 72.
There will be no longer be an age limitation on IRA contributions. Currently, those with IRAs cannot contribute any more once they reach age 70.5, but the SECURE Act will remove this age limitation and allow contributions at any age.
Within a year of birth or adoption, parents will be able to withdraw up to $5,000 penalty-free from retirement accounts for qualifying expenses.
Take note that, penalties for late returns will be increased from $105 per day up to $50,000.