The Secure Act passed overwhelmingly by Congress but hasn’t made its way through the Senate. Here’s a look at the Pros and Cons of the SECURE Act legislation.
The 5 Major Pros to the SECURE Act
- Increasing the age for Required Minimum Distributions (RMDs) to age 72-75.
- No age limit to be able to continue to contribute to a tax-deductible IRA – it now ends at age 70.5.
- Allow small employers and their employees greater access to the plan – pooling for small firms, a potentially larger credit for starting a plan, permanent part time employees eligible.
- Employer tax credit for auto-enrollment (a great thing to incentivize) but only $500.
- Penalty-free withdrawals in the case of birth or adoption – hopefully account owners use this option wisely and have a plan to put enough money away for their retirement over their working years.
The 2 Significant Cons to the SECURE Act (with some in-depth articles)
- Stretch IRAs will be a think of the past. Limited to 10 years – https://www.barrons.com/articles/the-stretch-ira-is-about-to-snap-under-the-secure-act-51562414402
- Peddling annuities to the unsuspecting 401k participant. My gosh the insurance lobby is strong, and we all know too well that our Congress people are happy to play ball with special interests! https://www.cnbc.com/2019/07/03/if-annuities-come-to-your-401k-savings-plan-heres-what-to-know.html