Update: Congress moves to make changes to the US retirement system.
This is an update to our 3/1/16 blog post on the major changes to the US retirement system if the Setting Every Community Up for Retirement Enhancement Act, commonly known as the SECURE act, is passed. Since our last post the likelihood of passage this year has gone down somewhat. Since May the bill has been sitting in the Senate, with supporters hoping for passage by unanimous consent versus the Senate writing its own version that would take much longer. The general consensus seems to be that the leadership in both houses want the bill to pass this year. The bill is being held up by mainly logistical issues. Priorities like confirming judges and a few senators who want additional amendments to the bill are holding things up. Given the short number of legislative days left in the year, the more likely scenario for passage would be attaching the current bill to an omnibus package of must-pass legislation at year end. What happens if passage is pushed into 2020? Even though both parties support the bill, 2020 is a presidential election year, which adds an element of uncertainty to passing anything. We’ll continue to keep our clients updated on any developments between now and the end of the year. In the meantime, here is a summary of notable changes proposed in the bill from our original post.
- Currently individuals are barred from contributing to their IRAs after age 70 1/2. The house bill would remove this limitation while also increasing the age taxpayers are required to start taking taxable distributions from their IRAs from 70 ½ to 72.
- The bill would make it easier for 401(k) plans to offer annuities by providing more liability protection to employers. This provision has been somewhat controversial, with some consumer advocates suggesting more protections for participants when negotiating annuity prices.
- The bill would allow parents to withdraw up to $10,000 from 529 education savings plans for repayment of student loans.
- One of the biggest changes would affect people who inherit retirement accounts. The bill would require heirs to withdraw the money within a decade and pay any taxes due. Currently, beneficiaries can take much smaller taxable distributions over their own life spans.
- The bill allows unrelated employers to create groups to offer a retirement plan. This is meant to encourage smaller firms to offer retirement plans.
Categories
Recent Insights
-
Before the Ballots: The Strategic Advantage of a SLAT During an Election Year
With less than 70 days until election day, the future of both the White House and the Senate hangs in the balance. Regardless of who wins, the ongoing challenges of rising federal deficits, unprecedented spending, and lower tax revenues could pave the way for higher taxes in the future. The estate tax exemption, which primarily…
-
Understanding Form 5500: A Guide for Business Owners
When it comes to managing your company’s retirement plan, one of the most important responsibilities is filing Form 5500. This form is crucial for maintaining compliance and protecting both your business and your employees. Let’s break down what Form 5500 is, why it matters, and share some practical advice on what to do if you’ve…
-
Expert Insight on Financial Independence for Women
The Women’s Guide to Financial Independence
-
Average Retirement Account Balance of Americans
Retirement Savings by Age
-
Issues to Consider When Creating Your Estate Plan | 2024
Estate planning can often be overlooked, yet it’s crucial for ensuring your wishes are carried out and your assets are managed effectively. Many people are unsure where to start or what questions to ask. This checklist is designed to provide clarity and guide you through the essential elements of estate planning. Key Considerations Include: Use…