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Has Trump Signed The Secure Act

What The Secure Act Means For Small Businesses

Congress passes Secure Act to help Americans prepare for retirement

When it was initially introduced, the SECURE Act was touted by legislators as a potential boon for small businesses, with House Majority Leader Steny Hoyer stating at the time that the bill would help American workers and their families save for a secure retirement.

One of the main ways this new law attempts to prove Hoyer right is the larger tax credit for small businesses that set up retirement plans for their employees and invest in their future retirement. The credit is designed for smaller employers of $250 per non-highly compensated employees eligible to participate in a workplace retirement plan at work , according to Fidelity.

This tax credit is only available to small businesses with up to 100 employees over a three-year period. It started on Dec. 31, 2019, and applies to multiple benefit plans, including SEP, SIMPLE, 401 and profit-sharing initiatives. An additional credit of up to $500 is available to companies that offer automatic enrollment for a 401 or SIMPLE IRA.

The SECURE Act also makes it easier for small businesses to sponsor employee retirement plans by removing previous restrictions on multiple employer plans , which let SMBs enter a plan with other businesses. The employers under the new multiple employer plan do not have to be related to one another, and it eliminates an IRS rule that all MEP participants face consequences if one employer falls out of compliance.

What Secure Act 20 Wouldnt Do

Theres no question that the measures spelled out in Secure Act 2.0 would improve the U.S. retirement system. But it hardly touches two of the biggest gaps in the current system: Fixing Social Security and requiring employers to automatically enroll all workers in a retirement savings plan.

Despite countless arguments to the contrary, Social Security isnt going bankrupt. The Social Security trust funds are slated to run out of money in a little more than a decadeif that came to pass, the result would be an immediate benefit reduction of about 25%. Congress needs to pass reforms that either raise payroll taxes or reduce benefitsor do a little of both.

Meanwhile, just half of American households are currently enrolled in a retirement plan of any kind, according to the Federal Reserve. Thats about the same rate as in 1998.

Over the last two decades, more and more companies have started automatically enrolling employees in defined contribution retirement planseven as defined benefit plans, aka pension plans, have withered away. For instance, 62% of employers auto-enrolled in 2020, according to the Plan Sponsor Council of America, compared to 46% the decade prior.

Heres the trouble with Secure Act 2.0. The bills will not mandate that existing retirement plans automatically enroll employees, and companies with fewer than 10 employees are exempt from the rules. Dont count on the new auto-enrollment provisions to change the status quo anytime soon.

Secure Act Is Signed Into Law

President Trump signed the Setting Every Community Up for Retirement Enhancement Act into law on Dec. 20.

The bill was tucked into the 1,700 page, $1.4 trillion Further Consolidated Appropriations Act, 2020 to fund half the government for the remainder of fiscal year 2020, which began Oct. 1. The House of Representatives approved H.R. 1865 on Dec. 17, followed by the Senate on Dec. 19.

Retirement and tax professionals should pay close attention to the effective dates, as several provisions became effective on the date of enactment, while numerous others are set to become effective on Jan. 1, 2020. As noted in an earlier post, the legislation includes a provision providing for a remedial plan amendment period until the 2022 plan year , or a later date if the Treasury Department provides one, for any plan amendment required under the SECURE Act and its accompanying regulations.

Legislative Background

Last May, the SECURE Act breezed through the House and it looked as if the legislation was on its way to quick enactment before getting bogged down in the Senate for the past six months for reasons unrelated to retirement policy. And while many industry observers remained bullish on the year-end prospects for enactment of the SECURE Act, there was some doubt beginning to creep into the conversations.

Key Changes

Other key provisions include:

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Explaining The Trump Tax Reform Plan

Lea Uradu, J.D. is graduate of the University of Maryland School of Law, a Maryland State Registered Tax Preparer, State Certified Notary Public, Certified VITA Tax Preparer, IRS Annual Filing Season Program Participant, Tax Writer, and Founder of L.A.W. Tax Resolution Services. Lea has worked with hundreds of federal individual and expat tax clients.

For most people, tax season comes to a close on April 15 each year. In 2019, many taxpayers were surprised to find they had to pay more taxes than the previous year, while others received significantly lower refund checks from the Internal Revenue Service even though their financial circumstances didn’t change.

Many tax specialists and accountants urged their clients to update their withholdings in order to avoid a hefty bill at tax time.

But how did this happen? Let’s take a closer look at President Trump’s changes to the tax codethe largest overhaul made in the last 30 yearsand how it impacts taxpayers and business owners.

A Look Inside Cyrus Vance Jrs Tenure As Manhattan Da

US President Trump signed anti

President Trump on Sunday signed a $2.3 trillion COVID-19 relief and government funding bill that includes $600 stimulus checks for most Americans, after refusing to accept the deal for days.

The nearly 5,600-page bill passed the House and Senate by overwhelming margins Monday night, just hours after its text was released.

Trump signed it several days after saying the legislation was a disgrace and calling on Congress to up the relief payments to $2,000 and scale back spending.

In a statement Sunday night, the president said he would ask for millions of dollars in spending to be removed from the bill.

I will sign the Omnibus and Covid package with a strong message that makes clear to Congress that wasteful items need to be removed, Trump said.

While the president insisted he would send Congress a redlined version with items to be removed under the rescission process, those are merely suggestions to Congress. The bill, as signed, would not necessarily be changed.

The bill authorizes direct checks of $600 for people earning up to $75,000 per year. The amount decreases for higher earners, and people who make over $95,000 get nothing.

Theres an additional $600-per-child stimulus payment.

In his statement, Trump said Congress on Monday would vote on a separate bill to increase payments to individuals from $600 to $2,000.

Therefore, a family of four would receive $5,200, the president said about the increase, which would require Republican approval.

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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.

Discrepancies Between White House Versions And Federal Register Versions

In February 2017, a review of presidential documents by USA Today showed that the White House posted inaccurate texts of Trump’s executive orders on its website, conflicting with the official versions published in the Federal Register. Most of the differences were minor grammatical or typographic changes, but there were “two cases where the original text referred to inaccurate or non-existent provisions of law.” This raised concerns among advocates for government transparency the executive director of the Sunlight Foundation said that the “last-minute edits” to the orders indicated problems with the Trump administration’s “vetting, sign-off, and publication processes for executive orders.” The inaccuracies also prompted concern because the Federal Register versions of presidential documents are often published several days after they are signed, “meaning that the public must often rely on what the White House puts out.” In the order on ethics guidelines for federal appointees, the WhiteHouse.gov section cites “section 207 of title 28, United States Code,” which ProPublica found does not exist. The correct citation, made in the Federal Register version, is section 207 of title 18. Presidential determination no. 11 is not in whitehouse.gov,40 however, it is in the Federal Register.

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Major Provisions Of The Secure Act

The SECURE Act tweaked a number of rules related to tax-advantaged retirement accounts. Here’s what it does:

  • Makes it easier for small businesses to set up 401s by increasing the cap under which they can automatically enroll workers in safe harbor retirement plans from 10% of wages to 15%.
  • Provides a maximum tax credit of $500 per year to employers who create a 401 or SIMPLE IRA plan with automatic enrollment.
  • Enables businesses to sign up part-time employees who work either 1,000 hours throughout the year or have three consecutive years with 500 hours of service.
  • Encourages plan sponsors to include annuities as an option in workplace plans by reducing their liability if the insurer cannot meet its financial obligations.
  • Pushes back the age at which retirement plan participants need to take required minimum distributions from 70½ to 72.
  • Allows the use of tax-advantaged 529 accounts for qualified student loan repayments .
  • Permits penalty-free withdrawals of $5,000 from 401 accounts to defray the costs of having or adopting a child.
  • Encourages employers to include more annuities in 401 plans by removing their fear of legal liability if the annuity provider fails to provide, and also not requiring them to choose the lowest-cost plan.

Trump Signs Coronavirus Aid Bill As Tensions Rise Over Next One

SECURE ACT: Key retirement changes effective for 2020

WASHINGTON President Donald Trump signed a nearly $500 billion interim coronavirus bill into law Friday that includes additional money for the small-business loan program, as well as more funding for hospitals and testing.

Trump was joined in the Oval Office for the bill signing by Republican lawmakers and Treasury Secretary Steve Mnuchin, who has been a key White House negotiator with Congress in coronavirus aid legislation. During the ceremony, Trump walked back his comments from the day before that people could get an injection of a disinfectant that kills the coronavirus, telling reporters that he was being sarcastic.

Trump also threatened to hold up the next round of coronavirus legislation if the U.S. Postal Service does not raise its rates. Democrats have been arguing for money to be included for the USPS in the emergency funding bills.

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Increase In Age For Required Beginning Date For Mandatory Distributions

Prior to the Secure Act, Section 401 of the IRC generally required that distributions under a qualified retirement plan must begin on April 1 following the calendar year a participant turns 70½ years old . The Secure Act increases the age from 70½ to 72, effective for individuals turning 70½ after December 31, 2019.

President Trump Signs Secure Act Into Law

The Setting Every Community Up for Retirement Enhancement Act of 2019 was passed by the House and Senate on December 17 and 19, respectively, as part of a budget bill known as the Further Consolidated Appropriations Act, 2020 . The bill was signed into law by President Trump on December 20. The Secure Act is the most significant retirement legislation in more than a decade. Below is a summary of the key provisions of the Secure Act, many of which became effective on January 1, 2020.

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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.

Understanding The Secure Act

COVID

The SECURE Act was designed to ease the looming retirement savings crisis by:

  • Making it easier for small businesses to offer their employees 401 plans by providing tax credits and protections on collective Multiple Employer Plans
  • Allowing retirement benefits for long-term, part-time employees
  • Removing maximum age limits on retirement contributions, formerly capped at age 70½
  • Raising the required minimum distribution age to 72 from 70½
  • Allowing penalty-free withdrawals up to $5,000 from retirement plans for the birth or adoption of a child
  • Relaxing rules on employers offering annuities through sponsored retirement plans
  • Allowing penalty-free withdrawals of up to $10,000 from 529 education-savings plans for the repayment of certain student loans
  • Revising components of the Tax Cuts and Jobs Act that raised taxes on benefits received by family members of students, some Native Americans, and deceased veterans.
  • To raise an estimated $15.7 billion to pay for these changes, the government removed the stretch IRA estate-planning strategy that permitted non-spouse beneficiaries of IRAs to spread disbursements from the inherited money over their lifetime. The new limit is within 10 years of the death of the original account holder

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Open Multiple Employer Plans

In general, a multiple employer plan is a retirement ) plan that is not a multiemployer plan and permits two or more unrelated employers to participate in a single retirement plan. Prior to the Secure Act, an employer was not permitted to participate in a multiple employer plan unless the employer had a commonality of interest with the other employers. The Secure Act allows employers, regardless of their industry, to join together to form a multiple employer plan, referred to by the Secure Act as a Pooled Employer Plan. The Secure Act also amends the Internal Revenue Code to provide that one employers disqualifying defect will not cause the disqualification of an entire Pooled Employer Plan . These provisions apply to plan years beginning after December 31, 2020.

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