Big Changes Ahead for Saving for Retirement
Who says Washington can’t agree on anything?
With bipartisan support, Congress just passed and the President signed the SECURE Act, legislation that provides significant changes and incentives to further help Americans save for retirement. Most of the provisions will take effect on January 1, 2020.
So, what does this mean for your IRA and 401(k)? Among its major features, the SECURE Act:
Removes the maximum age limit for making contributions to traditional individual retirement accounts (right now, that’s 70½).
Makes it easier for small businesses to band together to offer 401(k) plans and offers tax credits to those firms that do.
Raises the age to 72, up from 70½, when people need to start taking required minimum distributions from certain retirement accounts.
Encourages annuities in 401(k) plans by eliminating companies’ fear of legal liability if the annuity provider fails or otherwise doesn’t deliver.
Allows for younger investors to use up to $10,000 of 529 plans to pay off student debt
Allows small businesses to participate in multi-employer 401(k) plans and receive tax credits for implementing automatic enrollment
Lets part-time workers become eligible for retirement benefits, depending on how many hours they’ve worked in a given year.
With many Americans falling woefully short in saving for retirement, these new measures will hopefully encourage people to save more in the years ahead.
What are you waiting for? Check out Firstrade’s retirement accounts.
