How will SECURE Act affect your retirement?

TEN THINGS
YOU SHOULD KNOW ABOUT
“The SECURE Act”
Setting Every Community Up for Retirement Enhancement The SECURE Act
  1. Change age of RMD to 72.
  2. No Age Restrictions on IRA Contributions. You used to have to stop at age 70.5 but not anymore!
  3. 401(k) for Part-Time Employees – Starting in 2021 if you work at least
    500 hours for at least three consecutive years you can now contribute. Must be 21 by the end of the three years.
  4. Penalty-Free Withdrawals for Birth or Adoption of Child. You can take out up to $5,000 after the birth or adoption of a child without incurring the 10% penalty. You do still have to show the $5k as
    income on your tax return.
  5. Annuity Information and Options Expanded. This one does not start on 1/1/20. In 401(k) account, it will not only show you your balance but also lifetime payout option. The only way to do that is with an annuity. You will also be able to purchase an annuity in a 401(k).
  6. Auto-Enrollment 401(k) Plans Enhanced. Automatically signs up them up at 3% but they can cancel it or change the amount. The gradually increase the amount each year and stops at 6%.
  7. Help for Small Businesses Offering Retirement Plans. 3 Provisions. Increases tax credit available from $500 to $5,000. $500 credit for auto enrollment. Third, completely unrelated employers to participate in a multiple employer plan and have a pooled plan provider administer it. Allows small businesses Economies of
    Scale.
  8. Grad Students and Care Providers Can Save More. This allows students to show money they receive as income so they
    can make contributions to an IRA and start investing earlier. Similarly, difficulty of care payments to foster-care providers
    can now be used for IRA contributions.
  9. Stretch IRAs Eliminated. Now the funds must be distributed over 10 years.
  10. Credit Card Access to 401(k) Loans Prohibited. You cannot get issued a credit or debit card that gives you access to your 401(k). YOU can take a loan of up to 50% of your value but it has to be paid
    back in 5 years or longer if it was a for a first time home purchase.






2020 Important Retirement Numbers

Every new year brings a fresh beginning, this can be just as true now as it ever was.
In 2020, expect increases in savings pretax limits for workers looking toward retirement. If you’ve already reached retirement age, you’ll see a moderate increase in your Social Security benefits payments. However, there will also be increased premiums in Medicare Part B that will work to offset some of that.
Let’s take a closer look at more 2020 retirement numbers to see how they’ll impact your pocketbook.

Retirement Savings
In 2020, you can save up to $19,500 in 401(k) plans and as much as $6,000 in your personal IRA account.
If you’re age 50 or over, you can up those savings numbers by an additional $6,500 in 401(k) and $1,000 in IRAs.
Of course, it’s always smart to take advantage of pre-tax savings up to the maximum allowed.
2020 Social Security Benefits
As a 2020 Social Security benefit recipient, you’ll be pleasantly surprised by an increase to each of your checks next year. While the increase will be modest, any increase is better than none.
Unfortunately, the increase you’ll receive in 2020 is less than it was in 2019. This year, expect a 1.6% increase compared to the 2.8% hike that retirees received in 2019.
The good news is that this year’s boost is still in line with the cost-of-living adjustments over the past ten years, which averaged 1.4%.
The 2020 changes are inflation-based.

Premiums for Medicare
If you’re on Medicare, it’s time to get ready for increased costs in the coming year. For Part B premiums, your standard monthly costs will increase to $144.60. This is an increase from the $135.50 monthly premium in 2019.
However, the premium you’re required to pay depends on how much money you’re bringing in.
There a rule, referred to as the Hold Harmless Provision, that doesn’t allow people to experience a reduction in Social Security benefits due to a hike in Medicare premiums. But a good number of retirees will pay additional premiums amounts that are based on income adjustments.

Social Security Full Retirement Age Increase
For individuals born in 1958, 2020 will bring an increase in the full retirement age by two months. This will require an individual to reach the age of 66 years and eight months of age before qualifying. Once you reach this age, you’ll qualify for 100% of your Social Security retired worker monthly benefit.
If you decide to take your Social Security payout at any point between age 62 and the new qualifying
age, you’ll be subject to a permanent reduction in your monthly payout amount.
In addition, expect the qualifying retirement age to increase by another two months in 2021, and yet
again in 2022. It will peak at age 67 for people born in 1960 or later.

Don’t forget that 2019 is not over!
You can still participate in funding retirement accounts for 2019 but that window is closing. Contact us for more information on how we can help you.

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