The SECURE Act, a bill introduced this year to help save for retirement, is included in the $1.4 trillion government-wide spending package President Trump signaled he will sign this week.The bill’s full name is the Setting Every Community Up for Retirement Enhancement Act and it’s the first major retirement legislation since 2006. Richard Neal, chairman of the House Ways and Means Committee, has noted that the bill “represents a major bipartisan accomplishment.
The bill also includes new credits to small businesses to make it more affordable for them to offer their own retirement plans. One section of the bill increases the tax credit to help a small business with plan start-up costs. Another provision creates another tax credit to defray startup costs for new plans if those plans include automatic enrollment.
According to the Bureau of Labor Statistics, the labor force participation rate among workers over 70 has jumped in recent years and is expected to continue to rise. In 1996, the rate was 12.5% among Americans aged 70-74. In 2016, it was 19.2%. Lower barriers of entry to retirement plansThere are also a variety of less sexy provisions in the bill that would lower some of the barriers for workers to sign up for retirement accounts. A Pew analysis found that among workers employed by companies that offer a defined contribution plan, 28% of them are not participating.
Removal of the ‘stretch IRA’Another change — significant for estate planning — is a new provision that eliminates what is known as the “stretch IRA.” Currently it’s possible to put money into an IRA that can grow tax-free long after you die to benefit your children or even your grandchildren.