At press time, the SECURE Act still awaited a vote in the U.S. Senate, though it had already cleared the House of Representatives by a 417–3 margin in late May, suggesting strong bipartisan support. If enacted, the bill would introduce several meaningful changes for retirees and those saving for retirement. Unlike the Tax Cuts and Jobs Act of 2017, which largely left retirement policy untouched, the SECURE Act focuses squarely on modernizing retirement savings and distribution rules.
The Setting Every Community Up for Retirement Enhancement (SECURE) Act would create a safe harbor for employers to offer annuities within workplace retirement plans. Annuities are an increasingly important option for many retirees because they provide a predictable, lifelong income stream. For individuals who value financial certainty in retirement, this provision could make annuity options more widely available and easier for plan sponsors to implement.
Smaller employers stand to benefit from several provisions designed to reduce the cost and complexity of offering retirement plans. The bill would expand tax credits and other incentives to encourage small businesses to adopt retirement plans, addressing a common barrier that prevents many employers from offering retirement benefits. It would also make it possible for employers to join together to form pooled employer plans or multiple employer plans, which can lower administrative costs and improve access to better investment options by leveraging scale.
The SECURE Act would also broaden access for part-time workers. Under the proposal, certain long-term, part-time employees could become eligible to participate in their employer’s retirement plan, closing a gap that currently prevents many part-time workers from building retirement savings through their job.
On distribution rules, the bill proposes increasing the required minimum distribution (RMD) age from 70½ to 72. The RMD age determines when retirement account owners must begin withdrawing funds—and paying taxes—on the pre-tax savings they accumulated over their working years. Raising the RMD age gives retirees more flexibility to keep assets invested and potentially grow tax-deferred for a longer period.
The SECURE Act would also eliminate the age cap on IRA contributions. Today, individuals are prohibited from contributing to a traditional IRA after age 70½ regardless of employment status. Removing that restriction would allow older workers who continue to earn income to keep contributing to an IRA as long as they have qualifying earned income.
Another family-friendly change would permit new parents to withdraw up to $5,000 from a retirement account—without triggering the 10 percent early withdrawal penalty—within a defined period following the birth or adoption of a child. This provision aims to give families more flexibility to cover immediate expenses related to adding a child to the household.
With these potential changes on the horizon, individuals who value predictable retirement income or who continue working later in life should consider discussing their plans with a financial advisor. Whether you are just starting to save or nearing retirement, now may be an opportune time to review your strategy and determine how the SECURE Act’s provisions could affect your savings, distributions, and estate planning choices.
The content of this article is for informational purposes only. It is not intended to be a substitute for professional financial advice. Always seek the expertise of a certified financial advisor or other qualified provider with any questions you may have regarding personal finance, investment and money-related issues.