The Best Thing About The Secure Act 20
Like its namesake, Secure Act 2.0 tinkers with the retirement system, but doesnt secure Social Security, the most important source of retirement income for most Americans.
But the best thing about the bill is that it shows that nearly all of Congress, whose members cant agree on much at all, believes that Americans need more help when it comes to retirement.
Getting older isnt a partisan issue, says Catherine Collinson, chief executive of the Transamerica Center for Retirement Studies.
While Congress is focused now on marginal improvements, the popularity of the effort shows that its focused on the details and eager to make progress. That bodes well for the tough work to come when tackling real Social Security reform.
It should give all Americans hope that Congress has endeavored to build up the muscle memory to take on that pressing challenge.
Increase To Small Employer Tax Credits
The Secure Act increases up to a maximum of $5,000 per year the amount of the income tax credit available to small employers for qualified start-up costs of adopting a new qualified retirement plan. In addition, the Secure Act creates a new tax credit of up to $500 per year for small employers that establish a qualified retirement plan that includes automatic enrollment or add automatic enrollment to an existing retirement plan. Both credits are available for up to three years. These provisions are effective for taxable years beginning after December 31, 2019.
The Four Steps To Strike At The Heart Of The New World Order
We could say that Trump and his military allies hit globalism in four stages.
The first step was to strike international finance, which finances the Washington political establishment.
The GameStop operation doesnt appear to be the result of a random meeting of some small newbie investors who agreed to buy the shares of this company and caused major losses to the big Wall Street hedge funds that had placed instead put options against GameStop. As a result, Wall Street lost billions of dollars.
GameStop was the beginning of a controlled demolition. It has been the beginning of an attack at the heart of globalism.
The second step was the lifting of the harmful and useless Covid restrictions. If we follow the progression of Covid restrictions in the last six months, we can easily see how 46 states out of 50 lifted mask mandated.
The United States hasnt stepped into the Great Reset. On the contrary, it has distanced itself from it.
The third step was Operation Evergreen in the Suez Canal. Several naval experts pointed out something obvious: the positioning of a boat so big in a very narrow space such as the Suez Canal cant be the result of a coincidence.
That boat was placed there intentionally. A high military source revealed to the American journalist, Scott McKay, that on the containers carried by the boat there were child victims of human trafficking.
The US and Russian special forces would recover the children.
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What Is The Setting Every Community Up For Retirement Enhancement Act
The Setting Every Community Up for Retirement Enhancement Act is a bipartisan bill designed to help Americans save for retirement. The bill seeks to improve the country’s retirement prospects.
The bill passed the U.S. House of Representatives in a 4173 vote in July 2019 and then by the Senate as part of the Dec. 19 spending and tax-extension bills. It was signed into law by former President Donald Trump on Dec. 20, 2019.
Distributions For Expenses Related To The Birth Or Adoption Ofa Child
The Act permits penalty-free distributions for birth oradoption-related expenses of up to $5,000. Under the provision, thewithdrawal is available for up to one year following the birth orfinalization of the legal adoption of a child. Generally theadoption must be of a child under age 18, but adoption of olderchildren also is permitted if the child is physically or mentallyincapable of self-support. Although a qualifying distribution willbe penalty-free it will still be subject to then current taxes.This new distribution is not mandatory plan sponsors will have theoption whether or not to permit it. If permitted, the recipient ofsuch a distribution will be allowed to later repay all or a portionof the distribution to a qualified retirement plan in which therecipient participates , provided that the recipient plan will accept suchrepayment under its rollover provisions.
Effective Date: Plans may adopt this newdistribution provision for plan years beginning after December 31,2019.
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The Rationale For The Secure Act
The bill was drafted to address Americans’ difficulty in saving and investing for retirement. A 2018 study by Northwestern Mutual found that one in five Americans have no retirement savings at all, while one-in-three of those closest to retirement age have less than $25,000 saved. Given longer life expectancies than previous generations, coupled with the rate of inflation, a minimum balance of $1 million+ is recommended for retirement accounts by the date the individual plans to stop working.
You Have More Time To Contribute To Your Retirement Plans
Since individuals will have to wait longer to receive their retirement money, the SECURE Act lengthened the time people have to contribute to qualified retirement plans. Starting with the 2020 tax year, individuals can keep putting money into their traditional IRA as long as they are earning an income. The important thing to note is that you still cant contribute to your traditional IRA if you were over 70.5 years old in 2019.
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Be Aware Of Proposed Tax Changes
Tax laws are always evolving at their own pace. In the current political environment, differences in tax policy are on the forefront of everyones mind. While it is completely uncertain when, or even if, tax law changes could be implemented, here are some current proposals on the horizon and strategies to keep in mind going into the end of the year.
Nondiscrimination Testing Relief For Frozen Defined Benefitplans
In defined benefit plans that are closed to newemployees , existing employeescontinue to accrue benefits. Typically, as the participantpopulation ages and becomes more highly paid, frozen plans canexperience difficulty in satisfying the Code’snondiscrimination requirements. In fact, some plan sponsors opt toor are forced to completely freeze their DB plans to avoid running afoul of the testingrequirements. The Act addresses this issue by adding a new Coderule modifying the existing nondiscrimination rules to give certain”closed-class” plans a testing pass. This new Code ruleapplies to DB plans that were “soft-frozen” before April5, 2017 or DB plans that are frozen after April 5, 2017, were ineffect for at least five years, and did not substantially increasebenefit in the last five years prior to being frozen. We can expectthe details of this provision to be addressed in the coming monthsin new Treasury guidance.
Effective Date: These provisions are generallyeffective January 1, 2020, but employers have the option to adoptthese rules retroactively to plan years beginning after December 1,2013.
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Secure Act And Cares Act: Incredible Opportunities
Within the space of three months, two major pieces of legislation were enactedthe SECURE Act and the CARES Act. A panel at an Oct. 27 session of ASPPA All-Access discussed these measures and the opportunities they offer service providers. Justin Bonestroo, Senior Vice President, CBIZ Retirement Plan Services Shannon Edwards, President of TriStar Pension Consulting and Bill Presson, Executive Vice President, Sales and Consulting, EGPS Inc. offered their take on how these measures affect business practices and service models. Following are highlights of the discussion.
President Trump signed the Setting Every Community Up for Retirement Enhancement Act into law on Dec. 20. The sweeping measure makes many changes: among them, changes concerning the dates for required minimum distributions new deadlines for plan adoption higher penalties for not filing a Form 5500 allowing two or more unrelated employers to join a pooled employer plan expansion of multiple employer plans changes concerning part-time employees who are long-term staff members and safe harbor notice relief.
With the changes these measures make and the ways business is conducted during the pandemic, there now is an incredible opportunity for those who want to sell high-touch service to their clients, said Presson. There are things that just cant be handled by e-mail, he said.
Technology
Reach out and Touch
Trumps Strategy To Hit The Heart Of The Deep State
Therefore, this could have been the legislative procedure that may explain what happened in the last months.
This could have been Trumps master chess move to trick the deep state, which had orchestrated a coup détat to overthrow the President.
At this point, it is necessary to take a step back in time and look at the months of big upheaval after the night of November 3, when the biggest fraud of all time took place, until January 20, the days of the potentially fake inauguration of Joe Biden.
Everyone knew that the election was stolen from Trump. There was already overwhelming proof at that time, when for the first time in the US election history some miracles happened. Dead people were resurrected to vote for Joe Biden, and mail-in votes were entirely assigned to Joe Biden.
Everything was already clear, and Trump was perfectly aware that globalism was planning this coup two years earlier, when in 2018 he signed an executive order entitled Imposing Certain Sanctions in the Event of Foreign Interference in a United States Election, which considered the activation of a state emergency in case foreign meddling occurred in the US election.
Undoubtedly, meddling took place, especially in countries such as China, Italy, Spain, Switzerland, Canada and Germany.
The attack against the US sovereignty was already in course, and a mechanism was set in motion to oust President Trump.
Trump sat down by the riverbank and waited for the attack of his enemies.
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Termination And Distribution Of 403 Custodial Accounts
The termination of 403 plans has always sent shivers down sponsoring employers spines. While the termination of a 401 involves the relatively simple task of liquidating and distributing each plan account to the owner/participant, the funding vehicle for 403 plans include annuity contracts and custodial agreements which may not be liquidated and distributed at any given time. In 2011, the IRS issued Revenue Ruling 2011-17 that clarified that a terminating 403 plan may consider an annuity contract to be distributed upon the establishment of a fully paid individual annuity contract to the plan participant. These individual annuity contracts would hold the benefit until properly distributed in accordance with the Section 403 distribution requirements. However, the Revenue Ruling did not afford the same treatment to 403 custodial accounts.The Act now provides that custodial accounts also may be distributed in kind by the establishment of an individual custodial account.Effective Date: The Department of the Treasury is required to issue guidance within six months of the effective date of the Act. Once issued, such guidance will be effective retroactive to plan years beginning after December 31, 2008.
Lifetime Income Disclosure Requirements
As employer-provided retirement benefits have transitioned over the years from defined benefit pension plans to defined contribution individual account plans, much has been said about the need to educate plan participants to the importance of lifetime annuity distribution options. The Act contains two provisions designed to encourage plan sponsors and plan participants to consider lifetime annuity investment and distribution options under defined contribution plans.The first of these provisions require plan sponsors to include a lifetime income disclosure on a participant benefit statement at least annually, even if the plan does not offer annuity distribution options. Accordingly, this new disclosure requirement will impact all employers that sponsor a defined contribution retirement plan. The lifetime income disclosure will be an estimation of the monthly payments a plan participant and their beneficiaries would receive if benefits were paid in the form of a qualified joint and survivor annuity or single life annuity.The Secretary of Labor is directed to issue a model disclosure and to prescribe assumptions that plan sponsors can use in preparing these lifetime annuity estimates by December 2020.Effective Date: Employers must provide the lifetime income disclosure in benefits statements no more than one year after the later of the date the Department of Labor issues final rules, the model disclosure, or the assumptions relating to the new disclosure requirement.
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The Rules For Inherited Iras Have Changed
In the past, if a parent passed away with an IRA, a child would be able to receive this IRA as an inherited IRA. This type of IRA would then be distributed out to the child over the life expectancy of the child. Now, under the new law, that has all changed. Specifically, if a parent passes away and leaves an IRA to a child, the child can still receive the IRA as an inherited IRA but it must be completely distributed to the child within a period of 10 years. There are exceptions for spouses and those who are disabled.
Annuity Selection Safe Harbor
The second SECURE Act provision relating to the provision ofannuities in defined contribution plans creates a new fiduciarysafe harbor to encourage the plan sponsors to make available anannuity option. Once a plan sponsor determines to add an annuityoption, the selection of the annuity provider is an inherentlyfiduciary act, and in 2008, the Department of Labor adopted a safeharbor to protect fiduciaries from losses that may result due to aninsurer’s inability to meet its financial obligations under theterms of the annuity contract. However, the old safe harbor stillrequired fiduciaries to conduct substantial due diligence in orderto identify the safest available annuity provider. The new safeharbor is intended to replace the historic “safest availableannuity” standard with a minimum set of standards that anannuity provider must satisfy in order for a fiduciary to be ableto select the provider.
To qualify for the safe harbor relief, the plan fiduciary needsto ensure that the selected annuity provider represents that, forthe prior seven years and on an ongoing basis, it: operatesunder a license or authority of a state insurance commissioner tooffer guaranteed retirement income contracts files auditedfinancial statements in accordance with state laws and maintains financial reserves that satisfy all the statutoryrequirements of all states where the annuity provider conductsbusiness.
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If You Have A New Baby Or Adopt You Can Withdraw With No Penalty
Those new parents who either have a new biological child or adopt one can now dip into their 401, IRA, or other tax deferred retirement account without having to pay a customary 10% withdrawal fee. However, you must make the withdrawal within one year from the date of birth of the child, or the adoption date. You are also limited to a $5,000 limit on the withdrawal and you have to pay taxes on it. If you later decide to reimburse your retirement account by putting the $5,000.00 back into the account you can do so without incurring any taxes on that amount.
Do note that if you adopt your spouses child, then you would be ineligible to receive the penalty free withdrawal.
New Irs Penalty Relief Program For Form 5500
Later filers of Form 5500-EZ have been granted automatic relief from IRS late filing penalties applicable under 6652 and 6692 of the Internal Revenue Code for failing to timely comply with the annul reporting requirements found under 6047, 6058, and 6059 of the Internal Revenue Code, which apply to self-employed plans such as solo 401k plans and individual 401k plans. More.
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Withdrawals Can Be Used To Offset Child Costs And Student Loans
In some specific cases, funds from a retirement plan can be used to pay off certain life-altering costs, such as student debt and childbirth or adoption fees.
Under the new law, participants in a defined contribution plan like an IRA or a 401 can take out up to $5,000 for a qualified birth or adoption distribution. While a 10% early withdrawal fee was usually added to such a transaction in the past, the SECURE Act has removed that penalty. Furthermore, the funds can be paid back as a rollover contribution to an eligible contribution plan or IRA.
As for student loan repayments, families can now use an existing 529 account balance to help pay down that debt. According to the SECURE Act, a family can use up to $10,000 from their 529 account to help cover student debt costs after the student graduates. That $10,000 is the maximum that can be divvied out in a students lifetime. Funds from a 529 plan can also be used to pay for certain apprenticeship programs.
Required Minimum Distribution Age
The Secure Act also raises the age that Americans must start drawing from retirement savings, known as the required minimum distribution age, from 70½ to 72, as people are living and working longer. It also provides more years for people to contribute to individual retirement accounts, for the same reason.
It creates new rules that could expand lifetime-income options within workplace plans, such as annuities. That’s aimed at helping people establish reliable streams of income in retirement. It would also make it easier for employees to transfer retirement plan assets when they change jobs.
It also fixes a component of the 2017 tax overhaul that raised taxes on benefits received by family members of deceased military veterans, as well as taxes on some students and members of Native American tribes.
It is widely considered the biggest piece of retirement legislation since the Pension Protection Act of 2006. The Secure Act had bipartisan support among lawmakers, as well as many in the financial and retirement industries.
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