If you have a new baby on the way or are about to adopt – congratulations!

The SECURE Act will make it easier for small business owners to set up “safe harbor” retirement plans that are less expensive and easier to administer. Section 205 - Modification of nondiscrimination rules to protect older, longer service participants. Changes in the tax code, family relationships, and your own financial circumstances are common—requiring that you update your planning strategies every few years. Call or visit to set up an appointment.

e.g. Title I: Expanding and Preserving Retirement Savings, Section 101 - Multiple Employer Plans / Pooled Employer Plans. Repeals the maximum age for traditional IRA contributions, which is currently 70½. Section 111 - Clarification of retirement income account rules relating to church-controlled organizations.

According to a Washington insider, Cruz was trying to tweak the section on 529 accounts so that parents can use them for home-schooling expenses as well..

John, D'Monte. Section 104 & 105 - Increase in credit limitation for small employer pension plan startup costs and small employer automatic enrollment credit. This provision puts traditional IRAs on par with Roth IRAs, which do not have an age limitation. <>/ExtGState<>/XObject<>/ProcSet[/PDF/Text/ImageB/ImageC/ImageI] >>/MediaBox[ 0 0 612 792] /Contents 4 0 R/Group<>/Tabs/S/StructParents 0>> IRA Contributions Allowed after age 70 1/2. {h��쁾EݷOO~u��7v��ӓ9��=x�rb�R����u��}�y���r8뤘 ߹O�ٙ�j5;S\� Plan fiduciaries, plan sponsors, or other persons will be exempted from liability under ERISA related to the disclosures if computed in accordance with the assumptions and guidance and that include the explanations contained in the model disclosure. Fidelity does not provide legal or tax advice, and the information provided is general in nature and should not be considered legal or tax advice. Information contained on this site does not and is not intended to constitute an advertisement, solicitation, or offer for sale in any jurisdiction outside the United States, where such use would be prohibited or otherwise regulated. Contact our team today to start developing your human capital management program. Use up and down arrow keys to navigate. The LINK by Prudential free consultation provides an overview of your financial life and proposes solutions for you to consider. Copyright 1998-2020 FMR LLC. This flexibility would give employers the option to correct a failed actual deferral percentage (ADP) and/or actual contribution percentage (ACP) test, as well as the top-heavy test by making a 4% safe harbor nonelective contribution after the fact. Under the new law, a 529 plan may also be used to pay for certain apprenticeship programs. (For example, New York was non-conforming on K-12 expenses. You still can’t make prior-year traditional IRA contributions if you’re over 70 1/2. %���� The SECURE Act's impact on retirement accounts like IRAs and 401(k)s will be significant. A qualified birth or adoption distribution is any distribution from a plan to an individual within one year of the date of the birth or date of the legal adoption. Individuals who took a hardship distribution from a retirement plan for a first-time home purchase in the disaster area may recontribute the amount into the retirement plan without tax penalty. No employer contribution (including top-heavy minimum contributions) would be required until the employee has satisfied the plan’s normal eligibility requirements. Financial Advisor, "Sponsor Insights: What Every Financial Advisor Needs to Know About the SECURE Act of 2019,". A percentage value for helpfulness will display once a sufficient number of votes have been submitted. In general, most of the changes are taxpayer-friendly, helping increase access to retirement accounts and preventing older Americans from outliving their assets. Due to an increase in life expectancy, the Act adjusts the required minimum distribution age from 70½ to 72. Taxable years beginning after Dec. 31, 2019. Under current law, stipend and non-tuition fellowship payments received by graduate and postdoctoral students do not count as eligible compensation to contribute to an Individual Retirement Account (IRA).

The SECURE Act provides that this penalty would not apply to distributions for a qualified birth or adoption, if that distribution does not exceed $5,000 for each birth or adoption.

Effective immediately, without regard to when the plans are modified, Section 206 - Modification of PBGC premiums for Cooperative and Small Employer Charity (CSEC) Pension Plans. Schwartz Center for Economic Policy Analysis, "Inadequate Retirement Savings for Workers Nearing Retirement," http://www.economicpolicyresearch.org/resource-library/research/inadequate-retirement-savings-for-workers-nearing-retirement Opens in new window, 2. This is retroactive to January 1. Penalty-free Withdrawals for Adoption or Birth Expenses. The SECURE Act pushes back the age at which retirement plan participants need to take required minimum distributions (RMDs), from 70½ to 72, and allows traditional IRA owners to keep making contributions indefinitely. Since such workers do not have taxable income, they are not allowed to contribute for retirement to a defined contribution plan or IRA. This gives more flexibility to those who may be facing financial difficulties, and gives retirement accounts a chance to recover from this spring’s volatility. You can learn more about the standards we follow in producing accurate, unbiased content in our.

If you're a small-business employee whose employer is currently unable to offer a plan, consider letting your employer know about this new opportunity. It was the first significant retirement-related legislation enacted since the 2006 Pension Protection Act. endobj A Roth IRA is a retirement savings account that allows you to withdraw your money tax-free.