Understanding The Secure Act Video Course
Congress intended the SECURE Act to improve retirement security for Americans. By the end of this series, you will be able to explain the six key changes to the rules for saving for retirement and how you can potentially benefit from them. Or enroll in the interactive online course with virtual quizzes on our consumer-friendly education center.
Introduction - SECURE Act
The SECURE Act became law in late 2019. The acronym SECURE comes from the actual name of the bill “Setting Every Community Up for Retirement Enhancement Act.” Congress intended this law to improve retirement security for Americans. Will this new bill help you save more for your retirement? If you are an agent, do you have clients who can benefit from changes? We created this short video series to help you potentially personally benefit from the changes in retirement savings rules.
Contributing to an IRA after 70 1/2
Under the prior rules, you could not contribute any deposits to an IRA after age 70 1/2. This act removed the age limit. This means that older individuals and retirees may be able to make contributions to a traditional IRA. For the IRS to consider you eligible to contribute beyond 70 1/2, you must report “earned income” on your tax return. You receive earned income if you work for someone who pays you or if you own or run a business or farm.
Building a Bigger Nest Egg
Yes, you can build a bigger retirement nest egg even if you are not working. The SECURE Act extended the age at which we have to start to withdraw retirement savings from 70½ to 72.
What if retirement appears far away and you’re not eligible for your current employer’s 401(k) plan? The SECURE Act potentially helps. Prior to the act, companies with 401(k) plans had to offer access if the employee had reached 21 years of age and had one year of service. The law did not require companies to offer the plan to part-time employees. The SECURE Act opened eligibility to some people in this group.
New Family Benefits
The SECURE Act gives families new flexibility in using retirement savings to help their children. Parents can take up to $5,000, penalty-free withdrawals from a retirement plan upon the birth or adoption of a child. The 10% early withdrawal penalty will not apply.
401(k) Income Illustrations
You will see different information on your 401(k) statement in the future. The SECURE Act mandates that 401(k) providers show the potential income available from the fund balance. We expect that the statements may look similar to those sent by the Social Security Administration.
The Future of Stretch IRAs
IRAs still can be used to maximize the amount of money you leave for your children. However, The SECURE ACT restricts the length of stretch IRAs.