Impact of the SECURE Act

The SECURE Act was signed into law on December 20, 2019. This is a landmark piece of bipartisan legislation. This legislation will not only make retirement plans more accessible and affordable for small businesses, but it should also result in more American saving for retirement. Here are several of the key provisions.
1. Allows for open Multiple Employer Plans (MEP’s)
This provision allows unrelated small employers to band together in “open” 401K multiple-employer plans. This can reduce cost and administration.
2. Tax Incentives for Small Business Owners to Offer a 401K Plan
The potential tax credit for a small business will increase from $500 to $5,000 in certain circumstances.
3. New Age Requirement for RMD’s from Retirement Accounts
People are living longer so the act has raised the age for required minimum distributions (RMD’s) from age 70 ½ to age 72. Also, people over the age of 70 ½ can make deductible IRA contributions (this was previously prohibited).
4. Elimination of the Stretch RMD’s
The act requires all non-spouse beneficiaries to spend down inherited retirement assets by the end of the 10th year following the death of the account holder. In the past, inherited retirement account distributions could be stretched over the life of the beneficiary.

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