The SECURE Act

The Setting Every Community Up for Retirement Enhancement Act, or the SECURE Act was passed in December of 2019 and aims to increase access to tax advantaged accounts and prevent older Americans from outliving their assets. The Act will encourage employers who have previously shied away from retirement plans, which can be expensive and difficult to administer, to start offering them. The Act makes it easier for businesses to set up 401(k)s by increasing the cap under which they can automatically enroll workers in “safe harbor” retirement plan, from 10% to 15%  The Act also allows most part time workers to be eligible for employer retirement plans. 

In addition, the SECURE Act also pushes back the minimum withdrawal age from 70 ½ to 72. This better ensures that the individual will not outlive their retirement account.  The SECURE act also allows parents who have had a child to withdraw up to $5,000 from a retirement account and allows students to withdraw up to $10,000 from a 529 savings plan to pay off student loan debt.  In addition, under the SECURE Act, a non-spouse beneficiary of an IRA who opts to take this distribution as an inherited IRA must take distributions over a 10 year period, with the entire amount being withdrawn by the end of the 10-year timeframe.