U.S. House of Representatives passes SECURE Act
Published July 19, 2019
The House of Representatives recently passed the Setting Every Community Up for Retirement Enhancement (SECURE) Act by a vote of 417-3. Some of the most significant changes that the House version of the bill would make to retirement saving plans include the following:
- Increase the maximum automatic contribution rate for safe harbor qualified automatic contribution plans from 10% to 15%.
- Change the required minimum distribution rules so that required minimum distributions begin following age 72 instead of age 701/2.
- Require defined contribution plans to provide participants with annual disclosures about the lifetime income stream they could receive from their plan balances.
- Eliminate the prohibition on individuals making deductible contributions to traditional IRAs after age 701/2.
- Add an exemption from the 10% penalty tax for early withdrawals from 401(k) plans for up to $5,000 in the event of a qualified birth or adoption.
- Small employers would receive expanded tax credits for creating plans and encouraging auto-enrollment and be permitted to join with other unrelated employers to offer pooled employer plans.
Prior to passage of the SECURE Act (SECURE Act), the Senate was already considering similar legislation such as the Retirement Enhancement and Savings Act (RESA) and the Retirement Security & Savings Act (RSSA). If the SECURE Act eventually becomes law, it would be the most significant legislation pertaining to retirement plans since the Pension Protection Act of 2006. We will continue to carefully monitor this legislation as it moves through the Senate and potentially to the President and keep you informed accordingly.
For more information on the SECURE Act and how it might affect you, please contact your MCM professional or MCM Partner and Employee Benefits Services Team Leader Patti Smith, CPA via e-mail or phone (502.882.4434).