Are there Positive Changes Coming for the U.S. Retirement System?

Are you ready for retirement? Do you have enough money in savings for your retirement? If not, there is some good news. New legislation that passed the House is aimed to help Americans close the retirement savings gap so that they have enough money in their retirement accounts to provide for their needs throughout their retirement years.

The Setting Every Community Up for Retirement Enhancement Act of 2019 or “Secure Act” passed the House with overwhelming bipartisan support (417 to 3) on May 23, 2019. The legislation is expected to move to the Senate now for debate and a vote. The Senate has a similar bill, but many industry experts are hopeful that the Senate will pass the Secure Act and send it to the President.

How Does the Secure Act Help You?

The Secure Act is designed to help you save more money for retirement. A report released in March by the GAO estimates that 29 percent of homes with individuals 55 years of age or older had no defined retirement benefit plan or retirement savings. Proponents of the Secure Act believe that the provisions within the act will encourage employers to provide additional retirement options for their employees while encouraging individuals to save more money for retirements.

Some of the key provisions of the Secure Act include:

  • Encourage 401(k) plans to offer annuities as part of the plan to assist individuals in establishing a fixed, guaranteed monthly income after retirement.
  • Make it possible for small businesses to work together to offer their employees retirement plans.
  • Make it possible for some part-time employees to access retirement savings.
  • Increase the required minimum distribution age from 70 ½ years to 72 years, thereby adding additional time for individuals to contribute to individual retirement accounts.
  • Make it easier for employees to transfer their retirement plans when they change employment.
  • Correct a change caused by the 2017 tax reform bill that increased taxes on the benefits received by families of deceased military veterans, members of Native American tribes, and some students.
  • Allows parents to withdraw up to $10,000 from a 529 education savings plan to repay some student loans.
  • Individuals could deduct up to $5,000 a year to pay for the expenses of the birth or adoption of a child without paying penalties on the withdrawal.

Are There Downsides to the New Retirement Legislation?

With any new legislation, there are always some things that are not popular. A major change that could impact some individuals is the requirement to withdraw funds from an inherited tax-advantaged retirement account quicker. Currently, if you inherit a tax-advantaged retirement account, you could stretch out the withdrawals over your lifetime. However, the new bill requires that you withdraw all funds from the account within 10 years and pay the taxes due on the withdrawals.

Are You Ready for Retirement?

It is a great time to review your current retirement plan to determine if you are ready for retirement. Anytime that Congress makes a change in tax laws should trigger a review of your retirement plan.

Contact The Elder Care Firm of Christopher J. Berry by calling 888-390-4360 or by using the contact form on our website to schedule an appointment for you and your parents to meet with a Michigan estate planning attorney to discuss developing a plan that meets your parents’ needs and goals.

We have offices in Brighton, Livonia, Lansing, Bloomfield Hills, Novi, and Ann Arbor to better serve our clients and their families.

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