Palm Springs SECURE Act Attorney

On January 1, 2020, the President signed the SECURE Act into law, which was intended to make it easier for Americans to effectively plan and save for their retirement. With this new law in place, it is essential to consider the impact the Act will have on your retirement plan. At Heritage Legal, PC, our experienced retirement planning attorney will help you understand the new regulations included in the SECURE Act. If you have any questions regarding the SECURE Act and want to learn how it may impact your retirement plan, contact our office today.

Understanding the SECURE Act

The Setting Every Community Up for the Retirement Enhancement Act (SECURE Act) has changed many of the retirement plans used by private employers in the United States. The effects of the SECURE Act are far-reaching when it comes to retirement planning.

Congress drafted the SECURE Act in an attempt to help Americans save and invest for retirement more easily. A few of the most significant changes brought about by the SECURE Act include the following:

  • Beneficiaries can use 529 savings plans to pay up to $10,000 of student loan debt
  • Parents can use up to $5,000 from their 401(k) penalty-free for a child’s birth or adoption
  • Small businesses can save 15 percent of an employee’s wages automatically
  • Employers will receive a tax credit for offering employees new 401(k) or IRA accounts
  • Businesses must sign up more long-term, part-time employees for retirement accounts
  • It is easier for sponsors of retirement plans to include annuities as an option
  • The Act increases the required age for minimum distributions up form 70.5 to 72

The SECURE Act Incentivizes Employers to Expand Their 401(k) Programs

One section of the SECURE Act allows small businesses to join together to establish a shared 401(k) plan. These combined plans are known as Multiple Employer Plans (MEP). Small businesses can pool together their resources and minimize some of the administrative expenses that come with offering employees 401(k) access. They will also receive a federal tax credit for some of the costs of establishing a plan that automatically enrolls their new employees.

Part-Time Employees Will Become Eligible for 401(k) Plans

The SECURE Act requires that employers include long-term part-time employees in employer-sponsored 401(k) plans. This provision of the SECURE Act allows some part-time employees access to contribute to a 401(k) plan. The employees must have worked for the employer for at least 500 hours a year for three consecutive years. Under previous federal law, employers could exclude employees who didn’t work 1,000 hours or more in a 12 month period from their employer-sponsored retirement savings plan.

Employers still have the authority to impose an age requirement for participation in their sponsored 401(k) plans. If you are a part-time employee, attorney Christopher Heritage can help you determine whether or not your employer must allow you access to its 401(k) plan. When it comes to saving for retirement, contributing to a 401(k) plan is one of the best ways to save.

Delay Taking Required Minimum Distributions Until Age 72

Employees who participate in 401(k) and traditional IRA plans can now delay taking a retirement minimum distribution from their retirement accounts until age 72. Previously, Americans age 70.5 and older had to take the required minimum distributions out of their traditional IRA and 401(k) plans.

Americans Over Age 70.5 Can Contribute to 401(k) and Traditional IRA Plans

Traditional IRA and 401(k) retirement plan participants can not contribute to their Traditional IRAs and 401(k) plans even after they turn 70.5. Americans are living longer than ever. This provision of the SECURE Act allows retirement-aged Americans the ability to contribute to a retirement account during retirement and will help retirees continue to save for the future.

Parents Can Withdraw Penalty-Free Funds from their 401(k) Plans

The SECURE Act allows parents to withdraw up to $5,000 from their 401(k) or other workplace retirement savings plan for every new child. Parents will not need to pay the 10 percent additional penalty tax when they are withdrawing an early distribution after having a child or adopting a child.

Pay Off Student Loan Debt with Your 529 Plan

Under the provisions of the SECURE Act, plan holders can withdraw any remaining funds to put toward their own student loan debt, or the student loan debt of their children, spouses, or grandchildren. The SECURE Act also allows beneficiaries to use funds for qualifying vocational programs, trade schools, and apprenticeship programs.

The plan holder can use up to $10,000 to repay his or her own student loans after naming himself or herself as the beneficiary. Similarly, the plan holder can pay up to a lifetime limit of $10,000 for each of the beneficiary’s siblings. For example, a family with three children can take out a maximum of $30,000 from the 529 plan to pay off student loans.

Contact a Skilled Palm Springs SECURE Act Lawyer Today

Now is the best time to focus on your retirement planning. It is never too late to begin preparing for your retirement. The SECURE Act offers Americans several retirement planning benefits. At Heritage Legal, PC, our experienced retirement planning lawyer can help you take advantage of all of the benefits provided by the SECURE Act. Our clients rest assured that their retirement and estate plans are advantageous and further their goals. Contact us today to schedule your initial consultation.

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