Planning for a SECURE Future

There is a retirement savings crisis looming in America. Not only are we living longer, but according to Northwestern Mutual, a third of those approaching retirement age have less than $25,000 socked away in a retirement plan. Further, the U.S. Bureau of Labor Statistics reports that 45% of adults don’t even have an employer-provided retirement plan.

The Setting Every Community Up for Retirement Enhancement Act (nicknamed “the SECURE Act”), which became effective January 1, is meant to address this crisis by allowing Americans more opportunities and more time to contribute to their retirement savings. Here are a few highlights from the Act:

  • For those who have not attained age 70½ by the end of 2019, it increases to age 72 the age at which participants must begin taking required minimum distributions from retirement plans.
  • It removes the maximum age cap (previously age 70½) at which participants can contribute to individual retirement accounts.
  • It allows businesses to offer retirement plans to certain part-time employees.
  • It simplifies plan creation and administration for small employers.
  • It offers increased flexibility and tax incentives to employers who create new plans or set up plans with automatic employee enrollment.
  • It permits penalty-free withdrawals to help pay expenses of childbirth and adoption.

So, how are these tax advantages to be paid for? Significantly, no longer will non-spouse beneficiaries be able to stretch out inherited retirement accounts over their lifetime. With few exceptions, a retirement account going to anyone other than a surviving spouse must now be distributed within ten years after the original account owner’s death.

Questions? Please give us a call at (248) 477-6300.