The Setting Every Community Up for Retirement Enhancement (SECURE) Act was signed by President Trump on Dec. 20, 2019.
The fundamental purpose of the SECURE Act is to expand opportunities for Americans to increase their retirement savings. For workers, this provided additional savings opportunities by allowing for additional contributions to an IRA, extending the mandatory distribution age, removed early distribution penalties for certain purposes, and added lifetime distribution options from certain retirement plans.
For businesses, the attention was on simplification and expansion to the retirement system along with the lowering of administrative costs (which should entice smaller employers to offer retirement plans). The new tax law changes are being viewed as favorable to workers and retirees by allowing for an increase in their retirement savings. One significant drawback, for some IRA beneficiaries, was the adjustment to the allowable time period for which retirement assets are distributed, either outright or in trust, beginning in 2020.
The SECURE Act is not as sweeping as the Tax Cuts and Jobs Acts of 2017, but it is certainly one step in the right direction for addressing the woeful underfunding of many Americans’ retirement plans. If you would like to know more about how these new tax provisions may affect your family, please contact your Westwood advisor.