On December 20, 2019, President Trump signed into law the Setting Every Community Up for Retirement Enhancement (SECURE) Act, which has a laudable goal of expanding opportunities to increase individual retirement savings. The new law enacts several changes to employer-sponsored retirement savings plans, which historically have helped individuals save more for retirement than traditional IRAs.
Advisors working with business owners who have or are considering an employer-based retirement plan should familiarize themselves with the four most prominent changes laid out in the SECURE Act:
- Offering lifetime income annuity options in retirement plans
- Changes to enrollment requirements, tax credits, and tax-filing deadlines
- Adoption of multiple employer plans (MEPs)
- Eligibility of part-time employees in 401(k)s
Enhancing Lifetime Income
Several provisions in the new law encourage employers to offer lifetime income annuity options in their retirement plans. The key change of the SECURE Act is an enhancement of the fiduciary “safe harbor” protections for employers when assessing financially secure life insurance companies that provide annuities in employers’ qualified plans.