A new US retirement law explained

Sometimes, against all expectations, the US Congress can actually pass big and important legislation.

That’s certainly true of a sweeping new retirement savings bill that has passed the House with bipartisan backing. It stands a good chance of rolling through the Senate, then getting signed into law by President Trump.

Here are some highlights from the so-called Setting Every Community Up for Retirement Enhance Act of 2019, better known as The Secure Act.

The new law would make it easier to convert retirement savings into an annuity that would provide a steady stream of lifetime income.

Companies would offer this option in their 401(k) retirement savings plans. Right now,  less than 10% of American companies do.

New Parents: If you’re a new parent, under the proposed new law, you may be eligible to take penalty-free distributions from 401(K)s and IRAs of up to $5,000 within a year of the birth or adoption of a child.

Older Savers: With life expectancies rising and employees putting off retirement, lawmakers have proposed the elimination of the age cap for contributing to a traditional IRA. (It’s now 70½.)

Part-Timers: If passed, the new law would also expand eligibility of part-time staff working more than 500 hours to participate in 401(k)-style retirement plans

College Plans: If you’ve set up a 529 college savings savings plan, under the new legislation you may be able to withdraw as much as $10,000 for repayment of certain types of student loans.

Want to learn more? Here’s a link to all the key provisions of The Secure Act.

Before making any major decisions about your retirement savings, it’s usually a good idea to consult with a financial or tax advisor to assess what the new retirement bill will mean for you.

Photo Credit: Richard Walker via Flickr Creative Commons

Disclosure: This article is not intended to and should not be interpreted or used as taxation advice. Interactive Advisors is not qualified to and cannot provide any tax advice or prepare any tax documents for clients. Clients will need to consult an accountant or tax attorney to determine the tax implications of this bill for their individual situation.