Big changes coming in how you save for retirement
- The Secure Act was included in the $1.4 trillion spending bill approved by the House of Representatives on Tuesday.
- The measure now heads to the Senate, where it’s expected to be approved this week.
- Changes include requiring businesses to let long-term, part-time workers become eligible for retirement benefits, and making it easier for small businesses to band together to offer retirement plans.
The biggest legislative changes to America’s retirement system in 13 years appear to be headed for final approval by Congress.
On Tuesday, the House passed a $1.4 trillion spending bill that includes the bipartisan Secure Act, which aims to increase the ranks of retirement savers and the amount they put away. The measure now will head to the Senate, where approval is expected this week before lawmakers head home for the holiday recess.
“The Secure Act has been years in the making,” said Paul Richman, chief government and political affairs officer at the Insured Retirement Institute. “It’s filled with common-sense measures to strengthen retirement security for millions more American workers.”
Changes include making it easier for small businesses to band together to offer 401(k) plans and offering tax credits to those firms that do; requiring businesses to let long-term, part-time workers become eligible for retirement benefits; and repealing the maximum age for making contributions to traditional individual retirement accounts (right now, that’s 70½).
It also would raise the age when required minimum distributions, or RMDs, from certain retirement accounts must start to 72, up from 70½.
Additionally, the measure aims to allow more annuities in 401(k) plans by eliminating companies’ fear of legal liability if the annuity provider fails or otherwise doesn’t deliver. While companies already can offer annuities in their 401(k) lineups, just 9% do, according to the Plan Sponsor Council of America.