This month, both the House of Representatives and the Senate passed the SECURE Act, and it’s been signed into law.
The SECURE Act — or the Setting Every Community Up for Retirement Enhancement — offers small business owners a number of additional tax incentives for starting a retirement plan and seeks to make it less costly to do so.
Here are a few things to know about the SECURE Act:
- This act has removed the age cap for setting aside savings into a traditional IRA. The age cap, formerly 70 ½, goes away for individuals who have wage income.
- The required minimum distribution (RMD) age for retirement accounts increases to 72 (up from 70½).
- Inherited IRA distributions generally must now be taken within 10 years.
- Long-term and part-time workers are allowed to participate in 401(k) plans. The new law requires companies that offer 401(k) plans to allow part-time employees who have worked at least 500 hours a year for at least three consecutive years to set aside money from their paychecks into the plan.
- There are now more options for lifetime income strategies.
- Parents can withdraw up to $5,000 from retirement accounts penalty-free within a year of birth or adoption for qualified expenses.
- Parents can withdraw up to $10,000 from 529 plans to repay student loans.
Here at Trost Financial Consulting, we are working on retirement planning strategies specifically tailored to the new legislation, so please reach out to learn more.
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