By Lisa Showalter, TRA’s Business Development Director
On January 23, 2020, John Markley and Lisa Showalter helped to bring the SECURE Act into focus by stepping through highlights of the Act. You can listen/view to the recorded presentation below.
John and Lisa are long time active members of the American Retirement Association, a non-profit professional organization dedicated to the nation’s private pension system. The ARA worked tirelessly to make sure the SECURE Act contained much needed industry changes. Many of the provisions of the Act serve to encourage employers who have shied away from sponsoring a qualified retirement plan to start offering them to their workforce. For employers who are already offering a retirement savings plan, the Act contains provisions to support their continued sponsorship. All in all, the Secure Act is the most significant legislation impacting the private retirement plan system in over a decade. TRA is dedicated to helping our advisor partners and our plan sponsors understand and incorporate changes that will enhance the effectiveness of this critical employee benefit.
The SECURE Act highlights include:
- Addition of Pooled Employee Plans of PEPs to the retirement plan landscape. The Act solidified the concept of open MEPs (Multiple Employer Plans) calling them PEPs.
- Definition of who can sponsor and participate in a PEP, although additional guidance will continue to clarify this.
- Introduction of enhanced employer tax credits for start-up plans that apply for the first three years of the life of the plan.
- Extended the deadline for adoption of a qualified retirement plan to the due date of the business tax return on which the first deductible plan contributions will be taken.
- Introduction of a new employer tax credit for the addition of automatic enrollment provisions to the employer’s retirement plan, whether a new plan or an existing plan. This tax credit is applicate to the first three tax years in which the automatic enrollment provision in in place.
- Expanded options and extended deadlines for utilizing a 401(k) Safe Harbor Non-Elective Contribution, which can eliminate 401(k) testing failures.
- Eliminated Safe Harbor Notice requirements when using a Safe Harbor Non-Elective Contribution.
- Increased the cap under the Qualified Automatic Contribution Arrangement provisions from 10% to 15%.
- Elimination of Credit Card Loans from 401(k) Plan
- Addition of fiduciary protection for offering lifetime income investment option in a 401(k) Plan and the requirement for participant to receive a illustration of their plan benefit as a monthly income.
- Expanded plan coverage requirements to include long term part-time employees.
- Delayed the age to begin receiving required minimum distributions to age 72, from age 70 ½. Also, removed the prohibition on making deduction contributions to an IRA after age 72.
- Eliminated stretch IRAs
- Expanded the 529 Account’s definition of Qualified Higher Education Expenses which can be paid from the account, to include student loan repayments and costs of apprenticeship programs subject to certain limits.
- And much much more…