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The SECURE Act & Your Retirement Account


On December 20, 2019, the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act) was signed into law. Both the U.S. Senate and the House of Representatives overwhelmingly approved this important legislation with bipartisan support. Most provisions in the law went into effect on January 1, 2020; however, plans that are affected by the amendments required under this law will generally have until the first Plan Year beginning on or after January 1, 2022, or later if the Secretary of Treasury decides to extend this date.

In short, the SECURE Act will enhance the ability of Americans to save for retirement, provide new guidance to sponsors for the management of plans, and give employers better options to provide programs to employees who previously did not have retirement plan opportunities.

The SECURE Act is considered significant retirement security legislation because of a host of dynamic changes it puts forth and the ways they impact sponsors, employees, small businesses, and others.

With PenServ as your TPA, you can trust us to ensure that your plans and related activities are fully compliant with the SECURE Act and other applicable laws, and that you and your employees are realizing the best and most secure value for your investments.

This Newsletter will summarize some of the key elements of the SECURE Act, and how they may have an impact on you. Please contact your Plan Manager with any questions or for additional information.

Sponsor Impact

The following provisions may have an impact to the Plan Sponsor/Employer of certain Defined Contribution (DC) retirement plans:

  • Plan Adopted by Filing Due Date for Year may be Treated as in Effect as of Close of Year
  • Rules Relating to Election of Safe Harbor 401(k) Status
  • Increase in 10 percent cap for Automatic Enrollment Safe Harbor after 1st Plan Year.
  • Fiduciary Safe Harbor for Selection of Lifetime Income Provider
  • Increased Penalties for Failure to File Retirement Plan Returns
  • Treatment of Custodial Accounts on Termination of Section 403(b) Plans
  • Clarification of Retirement Income Account Rules Relating to Church-Controlled Organizations

For complete details, download the PenServ e-News PDF.

Participant Impact

The following provisions will affect participants in employer-sponsored retirement plans, as well as IRA account holders:

  • Repeal of Maximum Age for Traditional IRA Contributions
  • Increase in Age for Required Beginning Date for Mandatory Distributions
  • Modification of Required Distribution Rules for Designated Beneficiaries
  • Qualified Cash or Deferred Arrangements Must Allow Long-Term Employees Working More Than 500 but Less Than 1,000 hours per Year to Participate
  • Penalty-Free Withdrawals from Retirement Plans for Individuals in Case of Birth of Child or Adoption

For complete details, download the PenServ e-News PDF.

Small Business Impact & Group Plans

In addition to the above provisions, the following should help Small Businesses in offering retirement plans to their employees:

  • Increase in Credit Limitation for Small Employer Pension Plan Startup Costs
  • Small Employer Automatic Enrollment Tax
  • Multiple Employer Plans; Pooled Employer Plans.
  • Combined Annual Report for Group of Plans

For complete details, download the PenServ e-News PDF.

In addition to the above, there are several more provisions included in the SECURE Act, including the ability to consolidate annual reports for certain DC plans, expansion of qualified higher education expenses for Section 529 plans, the requirement for lifetime income disclosures on annual statements, and the removal of the ability to take loans from plans in the form of a credit card. This e-Newsletter is only meant to provide some material modifications made by the new law, and to help illustrate how these changes may affect your Plan.

We hope you’ve found this information to be useful, and encourage you to reach out to your Plan Manager with any questions you may have.  Thank you for your business!