The SECURE Act: Why It Could Bring Big Changes to 401(k)s, IRAs, and Annuities

September 12 2019

by CreativeOne -

The SECURE Act continues its journey through the Capitol.


The Setting Every Community Up for Retirement Enhancement (SECURE) Act first made an appearance on Capitol Hill in 2016. However, it finally made substantial progress in May of this year when it passed through the House of Representatives with overwhelming bipartisan support. The bill is now in the Senate.1


The SECURE Act would bring significant changes to the financial services and retirement planning industries. The bill primarily focuses on 401(k)s and employer-sponsored retirement plans. However, there are aspects that would affect IRAs, annuities, and other retirement planning vehicles.


Some of the law’s changes include:1


  • A mandate to provide 401(k) participation to part-time employees.
  • The ability for multiple small businesses to pool their employees under a single 401(k) plan.
  • A requirement to offer annuities and other guaranteed-income features inside 401(k) plans.
  • The ability to contribute to a traditional IRA as long as one likes.
  • Pushing back the required minimum distribution (RMD) age to 72 from 70 ½.
  • Additional exceptions for penalty-free early withdrawals, including those for new parents.
  • Elimination of the stretch provision. Inherited IRAs would have to be distributed within 10 years.

What’s the status of the SECURE Act?


While the SECURE Act cleared a significant hurdle in passing the House, that doesn’t mean it’s a certainty to become law this year. The law has stalled in the Senate as several Senators have put holds on the bill for a variety of reasons, many of which are unrelated to retirement planning.


The Senate is currently working to meet a September 30th deadline to fund the government and avoid a shutdown. There has been speculation that the SECURE Act could be tied to the spending bill. However, it’s also possible that the Senate could pass a clean spending bill with no attachments, which would leave the fate of the SECURE Act uncertain.2


Regardless of what happens this year with the SECURE Act, industry experts say that change is coming to the retirement planning industry. In a recent Benefits Pro article, the head of Prudential’s Harry Dalessio said that employers are beginning to focus on financial wellness.


That means offering solutions and strategies to help employees better prepare for retirement. Employers are exploring expanded 401(k) eligibility, the inclusion of annuities in their plans, and even incentives for employees to receive financial checkups with an industry professional.3


The retirement industry is changing. Are you prepared to take advantage of new opportunities? Let’s talk about your practice and your long-term strategy.


Contact CreativeOne today at 800.992.2642 and let’s start the conversation.





Related terms: Industry News, Legislation

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