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    3 Ways the Secure Act can Help You Prospect for Business

    • by secure_financial
    • Posted on 03 February, 2020

    1. Removal of the age limitation on IRA Contributions.  Previously, the starting age for required minimum distributions (RMDs) from retirement plans and traditional IRAs was 70 ½. Under the new law, RMDs don’t begin until you turn age 72. The old rule that discouraged people who worked later in life to contribute savings in an IRA.  The Secure Act will now allow those who choose to work past 70 ½ to contribute to IRAs and opens the door for a lot of planning strategies like additional back-door Roth IRAs later in life.

    2. Increase Small Employer Access to Retirement Plans and get a tax credit for 3 years. If you have clients with small businesses, the new bill makes some significant changes to a variety of retirement rules. It expands the ability to run multiple employer plans and make the process easier overall. It essentially allows small employers to come together to set up and offer 401(k) plans with less fiduciary liability concern and less cost than exists today.  The new bill also adds a new tax credit of $500 for 3 years to help smaller employers encourage automatic enrollment in their plan.  This small credit could potentially offset some of the costs of operating the plan in the beginning.

    3. Annuity Options Inside Retirement Plans. With the update to the safe harbor provision for plan sponsors to select annuity providers in order to offer in-plan annuities inside of a 401(k). Previously, many 401(k)s stayed away from annuities because of concerns about liability in picking an annuity provider for the plan. The new rules would ease this liability concern to some degree, potentially opening the path for more annuities to be offered inside of retirement plans. 

      To address this the Secure Act has some requirements that employers can use when choosing a group annuity to include as an investment within a defined-contribution plan, with new provider-selection rules. The legislation will protect employers from liability if they select an annuity provider that, among other requirements, for the preceding seven years has:
    • Been licensed by the state insurance commissioner to offer guaranteed retirement income contracts.
    • Filed audited financial statements in accordance with state laws.
    • Maintained reserves that satisfy all the statutory requirements of all states where the annuity provider does business.

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