Key Provisions from the SECURE Act

On December 20, 2019, President Trump signed the Setting Every Community Up for Retirement Act into law. The SECURE Act marks the most significant overhaul to retirement policy in years. And with these changes, comes a need for many people to review, or even revise, their retirement plans. This presents multiple prospecting and marketing opportunities for financial advisors.

In total, the SECURE Act consists of 30 provisions, each one affecting the way people save and plan for retirement. While the 125-page document addresses a wide array of topics, some stand to have a more immediate and direct impact on the everyday wage-earner.

Below is a brief overview of some of the key provisions from the SECURE Act that advisors should be discussing with their clients.

Annuities

  • Expanded retirement savings opportunities by making it easier to include annuities into 401(k) plans
  • Portability of lifetime income options for qualified plans.

RMDs

  • The Required Minimum Distribution Age has been increased from 70 ½ to 72.
  • The change does not apply to those who reached age 70 ½ by December 31, 2019.

401(k)s

  • Certain long-term, part-time employees can now participate in 401(k) plans. These employees must meet minimum service hour requirements.
  • The maximum automatic contribution percentage for “safe harbor” 401(k) plans has been increased.

IRAs

  • The age cap for contributing to traditional IRAs (previously 70 ½ years old) has been eliminated. Like Roth IRAs, traditional IRAs now have no age limitations.
  • Stretch IRAs for certain beneficiaries are no longer allowed. Those beneficiaries must now withdraw all money from the inherited plan within a specified time frame.

Overall, the SECURE Act covers a lot of ground. While designed to benefit retirees, it does comes with several complex changes that people need to be aware of. Advisors need to be proactive and start educating clients (and themselves) about how these key provisions from the SECURE Act could impact their long-term goals.

About the author

Legacy Financial Partners - Legacy Financial Partners is an independent and full service Life Insurance and Annuity FMO that provides specific marketing solutions to help their clients succeed. Using dynamic tactics, an extensive support network and progressive marketing options, Legacy Financial Partners provides unique and specific development strategies to their business partners.

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