Retirement May Become More SECURE

by | Jun 27, 2019 | News | 0 comments

 

 

Towards the end of May, the House of Representatives passed the Setting Every Community Up for Retirement Enhancement (SECURE) Act in bipartisan effort, potentially becoming one of the most impactful retirement savings legislations since 2006. Now that it’s on its way to the senate Under the SECURE Act, there are a few changes that can potentially better your retirement, if used correctly.

RMDs are getting a revamp—remember those? Need a refresher? Check out our RMD Rundown post here: https://ronaldgelok.com/the-rmd-rundown/. Under this act, the RMD age will be moved to 72, which has the potential to save thousands in taxes. The maximum age for traditional IRA contributions will also increase to 72. These two alone can possibly better your retirement savings if you take advantage. Anyone who is offered a 401(k) will also see benefits because jobs can offer annuity programs in their 401(k) plans. If the act passes, a new benefit will be offered for part-time employees – who will also have the option to participate in 401(k) programs.

Being a parent is paying off—literally. Under the new legislation, SECURE will help parents prepare for new baby expenses. Business Insider explains in this article https://www.businessinsider.com/how-much-does-it-cost-to-have-a-baby-2018-4 that expenses can cost up to $30,000 for pre-natal and post-natal care. Parents can withdraw up to $5,000 penalty free from retirement accounts within a year of birth or adoption for qualified expenses.

Keep in mind, the changes the SECURE Act would bring aren’t all gains. According to Forbes, the bill potentially allows the IRS to take up to one third of your IRA. The SECURE Act also shortens stretch IRAs, which can disrupt inheritance plans. With so many changes, 29 to be exact, it’s no wonder some people are confused and concerned about what this means for their retirement.

How This Affects You

You want extra money, right? Well being able to contribute to your IRA for an extra year and a half can grow your savings by $10,500, if you contribute the maximum amount. While it may not seem like much for your retirement, imagine the potential growth if it’s invested properly. Of course, delaying RMDs until age 72 can also grow your retirement savings because you won’t be forced to take taxable withdrawals for two extra years, allowing your money to grow and keeping it away from Uncle Sam.

401(k) is becoming one of the most popular employer-offered retirement plans. The addition of annuities in the 401(k) can offer employees peace of mind because it allows them the possibility of a guaranteed income for life—something many pre-retirees and retirees are concerned with. This presents another option to employers and gives them the opportunity to protect their savings.

The IRA changes may not affect everyone but can hurt those looking to pass it on to their heirs. The provision is dependent on each person’s situation, so a financial professional can further determine if it will affect your retirement and what you can do about it.

What’s Next?

If this bill becomes law, saving for retirement and ensuring funds last can either become easier or more complex. The SECURE Act has many provisions and has not yet passed into law but preparing for the changes now can potentially save time, headaches, and most importantly, money. Are you curious to learn how this bill may affect your retirement? Schedule a complimentary consultation with us. Our team of holistic planners can potentially help you understand the new act while making sure your retirement plan is on the right track. Give us a call at 1-800-467-8452 or email info@ronaldgelok.com to chat about your retirement concerns.