Two Minute Tips

Will the Secure Act help Americans save enough for retirement?

January 23, 2020

Share this article:

The Secure Act may be just what Americans need to help them save for retirement. (Photo from Pixabay user qimono)

Late last year, The U.S. Senate handed Americans an early Christmas gift on December 19 by approving Setting Every Community Up for Retirement Enhancement Act, or the Secure Act. We initially reported on Secure after the nearly unanimous vote in the House of Representatives in August.

The new law took effect on January 1, 2020 and made it easier for small business owners to offer retirement plans, and for more workers, including part-time workers, to save. But critics say the new legislation doesn’t go far enough to help Americans sock away the nest egg they’ll need for a secure retirement.

That’s the bigger story for enterprising business reporters to follow, but first, answer these questions on your readers’ minds:

How will the Secure act affect your readers?

By helping them save all the tax-advantaged money that the Internal Revenue Service (IRS) allows. The U.S. Bureau of Labor Statistics notes that only 55% of Americans have a retirement plan at work. How does that statistic represent workers in your demographic?

Many part-time workers employed by small business owners could benefit, and older workers can now save up to 72, instead of taking distribution from a retirement account at 70½, as previously required. Those with a 401(k) plan at work can benefit, too, by also contributing to a Roth Individual Retirement Account (IRA). Most (60%) U.S. workers with a 401(k) plan didn’t know they can contribute to a Roth IRA, according to a survey conducted by TD Ameritrade in August 2019.

How will the Secure act affect my small business?

The Secure Act allows small businesses to offer less expensive “safe harbor” retirement plans to part-time employees. Owners will also receive a tax credit of up to $500 a year if they create a 401(k) or SIMPLE IRA plan with automatic enrollment. Will offering a plan help these owners retain workers? Ask a panel of small business owners if they are thinking about setting up a plan for part-time workers. Only 28% of small business owners with less than 10 employees have retirement plans, and 34% don’t have one for themselves, according to SCORE, a nonprofit that mentors small business owners. Almost half (48%) of employees who left a small business job because of the lack of a retirement plan, SCORE found.

What else do I need to know about Secure?

There are tax disadvantages for those who inherited a “stretch” IRA after December 31, 2019. Instead of stretching out the money over their lifetime, non-spouse beneficiaries will now be required to withdraw all the money in an inherited IRA within 10 years of the original accountholder’s death. Find a few readers impacted by this change of law and ask if they have assessed a strategy to deal with this change of law. Loop a financial planner and a Certified Public Accountant into your discussion. The new law is estimated to raise $15.7 billion in additional tax revenue for the federal government.

More Like This...

Localizing the fight over gig economy legislation

Assembly Bill 5 (AB5) went into effect in California on January 1 amid much controversy. The bill was designed to combat worker misclassification and provide greater labor protections to gig

Two Minute Tips

Sign up now.
Get one Tuesday.

Every Tuesday we send out a quick-read email with tips for business journalism.

Subscribers also get access to the Tip archive.

Get Two Minute Tips For Business Journalism Delivered To Your Email Every Tuesday

Two Minute Tips

Every Tuesday we send out a quick-read email with tips for business journalism. Sign up now and get one Tuesday.

Our New Look
The Reynolds Center for Business Journalism is starting 2023 with a new look that we hope better illustrates our core mission to provide accurate and authoritative resources about business journalism, in order to help both reporters and news consumers understand the importance of business news and to demystify the sometimes arcane topics it covers.
Businesses, markets, and economies move in cycles – ups and downs – which is why our new logo contains a “candlestick” chart representing increases as well as downturns, and serves as a reminder that volatility is an unavoidable attribute of modern life. But it’s also possible to prepare for volatility by being well informed, and informing the general public to help level the information playing field is the primary goal of business journalism. The Reynolds Center is committed to supporting that goal, which is why the candlestick pattern in our logo merges directly into the name of our founding sponsor, Donald W. Reynolds.
Our new logo comes with a shorter name. Business is borderless, and understanding the global links in supply chains, trade, and flows of funds and people is essential to make sense of our fast-paced, globalized world. So we’re dropping the word “National” from our name and will aim to provide content that is applicable to business news globally.
We hope you like the new look. Best wishes for 2023!