Setting Every Community Up for Retirement (SECURE) Act: First Impression

“The SECURE Act was passed into law yesterday. Many features benefit the financial services industry. Some features potentially benefit small businesses, but affirmative action is required to take advantage”.

– Tony Novak CPA

Forbes retirement planning reporter Elizabeth Bauer wrote: “passage of the SECURE Act is great. But the process by which this occurred is appalling”. I certainly agree. This is no way to pass legislation that affects so many. The law is good for the financial services industry, but is it good for workers? The answer, of course, lies in whether employers elect to use the new provisions of the law. Since retirement plans are still purely voluntary for most employers, no retirement plan legislation is effective without a voluntary choice to participate.

Under the range of retirement planning changes under SECURE, a tax-free 529 college savings plan distributions can be used to pay for registered apprenticeship programs and up to $10,000 in student loan payments. The law also includes provisions to expand the eligibility of 401(k)s to include part-time workers that complete between 500 and 1,000 hours of service for multiple years, and to increase the age for required minimum distributions from age 70 1/2 to age 72 in 2020. Small employers may group together to offer 401(k)s.

The real bottleneck in small business retirement plans is lack of easy access to personal local professional service. We know that not all business support can be delivered effectively through a remote call center. On site support and an understanding of the business really helps. Under the current system employers complain that service outside of core investment management is lacking. Employees say that retirement plans are not their top priority, and they have a range of intersecting questions about taxes, banking and cash flow. They simply do not have access to the resources required – financial and otherwise – in order to make a commitment to retirement savings.

Freedom Benefits addresses this issue by offering small business employees direct access to professional help on demand, at short notice and in small increments, as an employee benefit without the worry of the cost of this support. We find that this type of financial help is far more valuable than other types of employee benefits to many employees.

Small business employers who set up a successful retirement plan for the first time may be eligible for a $500 tax credit. Call or email to plan an initial conversation about retirement plan incentives that will work best for your firm.

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