What is the SECURE Act?
SECURE Act is the biggest retirement system change passed by the US Congress in 13 years. Unfortunately, it had to be buried within the government’s spending bill; since nothing gets past the Senate lately.
The Social Security Administration has been communicating for over a decade about The Future Financial Status of the Social Security Program; and it does not look good. It made sense for Congress to transfer most of the retirement responsibility to the individuals.
1. The new SECURE Act increases the tax credit available for 50% of a small business’s retirement plan start-up costs to $5,000. The earlier limit was $500, so this is a 10x increase.
Part-time workers need to save for retirement too. With the gig economy picking up; a lot of individuals chose to work part-time. Also some industries like retail hires seasonally; so this should benefit those workers as well.
Student Loan repayment
The SECURE Act makes a provision for a withdrawal of up to $10,000 from 529 plans to repay student loans. Given the student debt crushing the millennial generation and the high interest cost associated with various student loans; this could makes sense for some individuals.
New parents, through birth or adoption will be eligible to withdraw $5,000 penalty-free from Retirement plans including workplace 401 (k) to offset the cost of qualified delivery or adoption expenses. This limit is per partner; so ideally you could have access to a combined $10,000.
Graduate students and care providers can save earlier
Graduate and post-doctoral students often receive stipends or similar payments that aren’t treated as compensation under the current law.