It seems like every year there is a new bill moving through Congress that promises to change the way people deal with retirement. This year, however, one bill is really living up to that hype.
The SECURE Act (Setting Every Community Up for Retirement Enhancement) was signed into law in December of 2019 and is meant to help Americans save more money towards their retirement.
What makes this particularly helpful is that it seems to be of benefit for those who work steadily with one company on a part-time basis and those who work at small independently-owned businesses.
Here’s what the SECURE Act will do:
- As it currently stands, when you turn 70 ½, you have to take out a minimum distribution from your IRA or 401(k) retirement savings. Starting this year, the age will shift to 72. This means you can leave your money in savings longer without a tax penalty. Given that many Americans will now live longer than previous generations, it’s a good idea to leave the money in place for longer so you can use it as you get older.
- Another new aspect is that part-time employees previously blocked from a company’s 401(k) plans can now pay into the system. As long as an employee has worked at least 500 hours a year for the same company for three straight years, then he or she can take advantage of the company’s plan. The company does not necessarily have to provide matching funds, but this is still a great deal for those part-time employees who previously didn’t have a retirement plan.
- Those looking to start a family can also withdraw money from their 401(k) or IRA without a penalty if that money is going to be used for adoption or childbirth (with a limit of $5000).
- Finally, the new act will also provide workers with information that they can use to plan their retirement. They will begin receiving an estimate on how much their 401(k) will translate into for monthly income once they retire. This knowledge is invaluable when it comes to planning your retirement.
The SECURE Act is going to make some big changes to the retirement plans for thousands of Americans. In order to take advantage of this, it’s important to research your retirement options and make educated decisions that will serve your needs.
More information on the SECURE Act HERE.