Business News Daily: What the SECURE Act’s Passage in the House Means for SMB Retirement Plans
Author: Siân Killingsworth / 24 May 2019
Weeks after its passage through the Ways and Means Committee, “Setting Every Community Up for Retirement Enhancement of 2019,” or the SECURE Act, got one step closer to becoming a law following a 417-3 vote in the House of Representatives.
This piece of legislation had strong bipartisan support and is considered a major step in making retirement benefits more attainable for American workers.
What the SECURE Act means for small businesses and American workers
If made into a law, the SECURE Act will:
- Offer a larger tax credit to small businesses that opt to set up retirement plans for their employees
- Make it easier for small businesses to sponsor plans by removing existing restrictions on multiple employer plans (open MEPs) that let SMBs enter a plan with other, unrelated businesses
- Give employers a “fiduciary safe harbor” when selecting a lifetime-income provider.
- The bill increases the age that retirees must reach before being able to withdraw cash from their individual retirement accounts (IRAs) and 401(k)s from 70.5 to 72.
- It removes the age cap for contributions to IRAs entirely, allowing older workers to put money into their retirement accounts.
- It allows employers to increase employee contributions from 10% to 15%.
- The bill allows long-term, part-time workers to participate in 401(k) plans by requiring employers to have “a dual eligibility requirement under which an employee must complete either a one year of service requirement (with the 1,000-hour rule) or three consecutive years of service where the employee completes at least 500 hours of service.”
- It allows new parents to withdraw up to $5,000 from retirement accounts to cover expenses for their newly born or adopted child without any penalties.
Our founder and CEO Chad Parks is encouraged by the bill’s attention to small businesses retirement issues.
“Many of the changes that were included in this legislation show that regulators are working to clean up some loose ends and loopholes that were historically problematic to plan administrators and employees…While the fate of this legislation is unknown at this point, we are enthusiastic about regulatory support to help end the looming retirement crisis.”