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How the new law affects your retirement.
By Steve Jones
Regional Director, Gulf Coast
Wealth Management
Private Client Group
Hilltop Securities Inc.
This is the first of two articles that seek to define, in easily understandable terms, the various provisions of the act based on the people it impacts: individuals saving for retirement and business owners.
On Dec. 20, 2019, Congress passed the Setting Every Community Up for Retirement Enhancement Act of 2019 (the SECURE Act). The act is the first major piece of retirement legislation since the passage of the Pension Protection Act in 2006, and it seeks to help workers increase their retirement savings by loosening or eliminating the cost, administrative, and legal barriers that often prevent employers from offering retirement plans.
How the Act Became Law
Many in the financial services industry have been watching the bi-partisan bill make its way through Congress for the past three years. The bill was originally passed by the House in May of 2019 and politicians, lobbyists, and advocates alike regarded it as a major victory for working Americans.
However, the bill stalled in the Senate, despite bi-partisan support. Senate supporters originally moved to pass under unanimous consent—a fast-track option to passage without any changes. Yet, key provisions (mainly changes to 529 college savings accounts) led Senate lawmakers to place holds on the bill in June.
Then, in late December, the SECURE Act was incorporated into a broader 2020 fiscal year appropriations bill, approved by Congress on Dec. 19, 2019, and signed into law by President Trump on Dec. 20, 2019.
How the SECURE Act Affects Your Retirement Plan
The act’s sudden passage caught industry participants by surprise, resulting in a scramble to consider its impact. The following is an overview of the provisions that directly affect the retirement plans of American workers, starting with the sections we believe will have the largest impact:
If you currently have an estate plan wherein you are leaving accounts to your heirs, you should work with your financial advisor to determine how the new law impacts these retirement accounts.
Addressing the New Legislation
The SECURE Act is the first piece of substantial retirement legislation in over a decade, and its various provisions seek to strengthen the retirement of millions of American workers. However, some retirement planners, industry professionals, and lawmakers believe the changes do not represent the sweeping overhaul the U.S. retirement system needs. Even then, what is clear is that the act does represent a step in the right direction.
Many of the SECURE Act’s measures may require you to make changes to your current retirement accounts and/or estate plans. The above breakdown represents our initial impressions of the new legislation’s various provisions. We encourage you to speak to a financial advisor to discuss the direct ways in which you may be affected by the new laws.
Hilltop Securities Inc. (HTS) is a registered broker-dealer, registered investment adviser and municipal advisor firm that does not provide tax or legal advice. This material is not intended to replace the advice of a qualified tax professional. Before making any financial commitment, consult with your tax adviser. This information may not be duplicated or redistributed without prior consent of HTS. HTS is a wholly owned subsidiary of Hilltop Holdings, Inc. (NYSE: HTH) located at 1201 Elm Street, Suite 3500, Dallas, Texas 75270. Member: NYSE/FINRA/SIPC.