ARE YOU SECURE FOR ’24?
WHAT IS THE SECURE ACT?
The SECURE Act stands for Setting Every Community Up for Retirement Enhancement Act. Signed into law in 2019, it and its successor, the SECURE Act 2.0, are designed to help Americans save for retirement.
The SECURE Acts make it easier for employers to offer their employees tax-advantaged savings plans and for them to participate in them.
HOW DOES IT WORK?
With the help of an estates attorney, the Donor Spouse establishes an irrevocable trust and names the other spouse, the Donee Spouse, and possibly dependent children as the beneficiary. The SLAT allows the trust funds to remain untouched where they can mature free of federal and estate tax. However, the SLAT can distribute funds to the Donee Spouse; thus the Donor Spouse may still benefit indirectly from the proceeds.
WHY WERE THE SECURE ACTS PASSED?
Many Americans have not saved enough money for retirement and will have a shortfall of cash to fund their golden years.
HOW DOES THE SECURE ACT HELP?
The major provisions of the SECURE Act include:
- Making it easier for small businesses to offer their employees 401(k) plans.
- Adding tax credits and protections on Multiple Employer Plans.
- Long-term, part-time employees can get retirement benefits.
- Employees can now contribute to their traditional IRAs beyond age 70.5.
- Individuals can use 529 plan money of up to $10,000 without penalty to pay student loans.
- Raising the required minimum distribution age from 70.5 to 73.
- Allowing penalty-free withdrawals of up to $5,000 from retirement plans for the birth or adoption of a child.
- Making it easier for employers to offer annuities.
- Removing the stretch IRA estate-planning strategy that permitted non-spouse beneficiaries to spread disbursements over their lifetimes. The new limit is within ten years of the account holder’s death.