The SECURE (Setting Every Community Up for Retirement Enhancement) Act was signed into law on December 20, 2019. Provisions of the SECURE Act include
• expansion of Multiple Employer Plans,
• modifications to the rules on Required Minimum Distributions (RMD),
• permitting plan withdrawals for birth or adoption,
• modifications to the age for In-Service Withdrawals in Governmental 457(b) and Pension Plans,
• modifications to Automatic Enrollment and Safe Harbor 401(k) Plan requirements,
• modification of Eligibility Rules for long term part-time employees, and
• modifications to plan adoption rules.
Some of these provisions require that the Plan Document be amended to allow them. For example, in order to take advantage of the Birth or Adoption withdrawal, your retirement Plan Document must be amended. Birth or Adoption Withdrawals can also be taken from IRAs.
Birth or Adoption Withdrawals of up to $5,000 may be taken within 1 year of the birth or adoption. These withdrawals are not subject to the 10% penalty for early withdrawal, and can be repaid to the plan or IRA without regard to the 60-day requirement to repay or rollover the money. This provision was effective for distributions made after December 31, 2019.
It has been recognized that employees are living longer and working longer. As a result, the age to start RMDs has been increased from 70 ½ to 72. In addition, individuals age 70 ½ and older are now allowed to make contributions to their IRAs, as long as they have earned income and meet the other criteria for IRA contributions.
Many 401(k) Plans currently require employees to complete 1 year of service to be eligible to enter the Plan. For plan years starting after December 31, 2020, employees may also qualify after working 3 consecutive years in which they work at least 500 hours. Since this 3 consecutive year rule is effective in 2021, employees who meet this criteria will enter the plan in 2024.