Engage Your Local Business Community with These 3 Stories on the SECURE Act

by March 25, 2020
How will the SECURE Act change how small businesses prepare their employees for retirement? (Image credit: Pixabay user Pexels)

The second part of our series on SECURE Act focuses on the business community in your reporting area. 

There’s still more to report on the end of the “stretch” IRA, which got most of the attention when Congress enacted the SECURE Act shortly before the end of 2019. The new law, which gave financial planners less than two weeks’ notice, still does not have any definitive guidance from the Internal Revenue Service (IRS). 

What “workaround” solutions are estate-planning attorneys recommending to their clients, and why? That’s the first story below to report, followed by two others that focus on the decisions that your small-business owners are considering, and how company 401(k) administrators are planning to make annuities available to their employees.

What “workaround” strategies are IRA beneficiaries considering?

Beginning in 2020, non-spouse heirs, such as children or grandchildren, can no longer “stretch” an inherited IRA over their lifetime, but there are “workaround” solutions: A surviving spouse can roll the money into his or her own IRA and postpone required distribution until the age of 72. Minor children (but not grandchildren) can wait to withdraw until they reach the age of majority, or the age of 26, if they are in school. Other strategies: splitting the money between a spouse and children, which gives younger beneficiaries a new 10-year timeline or converting a traditional IRA in stages to a Roth, are other strategies. What challenges are these attorneys facing as they comply with two sets of laws that govern inherited IRAs set up before the change of law, and afterwards? 

Will more small-business owners offer retirement plans in 2020?

SECURE allows small-business owners to set up a “safe harbor” plan, a less expensive type of 401(k) plan. Among other incentives, Secure increases the tax credit for plan startup costs from the current $500 to as much as $5,000 in certain circumstances. It also sweetens the pot by giving employers $500 for three years in plans that add automatic enrollment for new hires. The Society for Human Resource Management (SHRM) offers a good backgrounder. 

Will more companies put annuities within reach of retirees?

Administrators of 401(k) plans are now required to provide retirement plan participants with an annual estimate of on how much money they can use each money to buy an annuity. Annuities offer a guaranteed lifetime monthly or annual income, but they pay less than other types of investments. “Can Annuities Become a Bigger Contributor to Retirement Security?” That’s the question asked in this June 2019 reports from the Brookings Institution in Washington, D.C.  

Contact a range of small-, medium-, and large companies in your reporting area and find out how they are rolling out the process to employees. Also put out a blast on social media to gauge what questions your readers have about annuities.