Understanding The SECURE Act, Part 2

Episode 113 of the The Financial Answer with Nathan O’Bryant podcast, hosted by Nathan O’ Bryant, titled "Understanding The SECURE Act, Part 2" was published on July 3, 2019 and runs 21 minutes.

July 3, 2019 ·21m · The Financial Answer with Nathan O’Bryant

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Summary

The SECURE Act will bring several changes that may impact your retirement planning, and Nathan will go over four more of those provisions. This concludes our two-part series on the SECURE Act 2019. Full show notes: https://thefinancialanswer.com/podcasts/understanding-the-secure-act-part-2/ ----more---- Confidence Corner 1:50 SECURE Act 2019 (continued) This is part two talking about the SECURE Act, so go back to the previous podcast for part one. First major retirement legislation since 2006. 29 new provisions, but we will talk about eight. This is not yet finalized and the Senate has a similar bill. 4:26 Tax credits for automatic enrollment This will be an incentive for small companies to automatically enroll employees into a retirement plan. Employees will have the option to opt-out. The credit will go to the business owner to help offset the cost of setting up the plan. So many Americans are employed through small businesses, so hopefully this will help more people to start saving. 8:34 Penalty-free distributions for the birth or adoption of a child Under the Act, you could take out $5,000 from your retirement following the birth or adoption of a child. This allows you to avoid the 10% penalty, but you still pay the taxes. 10:48 Lifetime income disclosure for defined contribution plans A 401(k) plan is an example of a defined contribution plan. This rule would require employers to send a notice every year showing the expected growth of your money and your estimated monthly income in retirement. Nathan says it sounds like it will be a state-run plan under the proposed rules. 14:29 Removal of stretch IRA provisions Nathan loves stretch IRAs and feels this is the worst item in the SECURE Act because it eliminates a fantastic retirement building tool. This makes an inherited IRA have to be paid out, and therefore taxed, over a ten-year period. In the Senate, they are discussing setting a limit for this, which will have an impact on Roth conversions. Typically, Nathan recommends Roth conversions once an account hits $700,000, but if this is passed in the Senate with a limit then he will be forced to have that conversation with clients much sooner.

Episode Description

The SECURE Act will bring several changes that may impact your retirement planning, and Nathan will go over four more of those provisions. This concludes our two-part series on the SECURE Act 2019.

Full show notes: https://thefinancialanswer.com/podcasts/understanding-the-secure-act-part-2/

----more----

Confidence Corner 1:50 SECURE Act 2019 (continued)

This is part two talking about the SECURE Act, so go back to the previous podcast for part one.
First major retirement legislation since 2006. 29 new provisions, but we will talk about eight. This is not yet finalized and the Senate has a similar bill.

4:26 Tax credits for automatic enrollment

This will be an incentive for small companies to automatically enroll employees into a retirement plan. Employees will have the option to opt-out. The credit will go to the business owner to help offset the cost of setting up the plan.
So many Americans are employed through small businesses, so hopefully this will help more people to start saving.

8:34 Penalty-free distributions for the birth or adoption of a child

Under the Act, you could take out $5,000 from your retirement following the birth or adoption of a child.
This allows you to avoid the 10% penalty, but you still pay the taxes.

10:48 Lifetime income disclosure for defined contribution plans

A 401(k) plan is an example of a defined contribution plan. This rule would require employers to send a notice every year showing the expected growth of your money and your estimated monthly income in retirement.
Nathan says it sounds like it will be a state-run plan under the proposed rules.

14:29 Removal of stretch IRA provisions

Nathan loves stretch IRAs and feels this is the worst item in the SECURE Act because it eliminates a fantastic retirement building tool.
This makes an inherited IRA have to be paid out, and therefore taxed, over a ten-year period. In the Senate, they are discussing setting a limit for this, which will have an impact on Roth conversions. Typically, Nathan recommends Roth conversions once an account hits $700,000, but if this is passed in the Senate with a limit then he will be forced to have that conversation with clients much sooner.