On Thursday, May 23rd, the House of Representatives passed the Setting Every Community Up for Retirement Enhancement (SECURE) Act, a bill backed by both Republicans and Democrats with an aim to improve areas of our current retirement system.
The SECURE Act of 2019 includes the following provisions:
• Repeal the maximum age for traditional IRA contributions from the current age of 70 ½.
• Increase the required minimum distribution (RMD) age for retirement accounts up to 72.
• Allow long-term part-time workers to participate in 401(k) plans.
• Allow more annuities to be offered in 401(k) plans.
• Parents can withdraw up to $5,000 from retirement accounts penalty-free within a year of birth or adoption for qualified expenses.
• Parents can withdraw up to $10,000 from 529 Plans to repay student loans.
As good as some of these long-needed provisions sound, the news gets even better as there are currently two bills in the Senate that are seeking to go even further in the enhancement of retirement plan rules along with raising the RMD from 70 ½ to age 75.
The Retirement Security and Savings Act of 2019 is the most recent bill introduced by Senators Ben Cardin (D-MD) and Rob Portman (R-OH) on Monday, May 13th. The bill goes beyond phasing in the RMD age increase over several years along with updating mortality tables to reflect longer life expectancies. A key feature allows employers to make matching contributions to a retirement plan while their employees make student loan payments, thereby addressing a further concern regarding the growing consumer debt particularly in the area of student loans. This bill somewhat overlaps with provisions in RESA, introduced on April 1st, making RESA remarkably similar to the SECURE Act which passed the House of Representatives on May 23rd.
RZ Wealth will keep you posted as these bills work through the system addressing concerns in consumer debt and retirement security while providing additional tax benefits in the process.
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