Defined Contribution

What You Need to Know About the SECURE Act

Analyzing the SECURE Act's Implications
clock
1 min 13 sec

Last Friday, the most substantial legislation affecting retirement since the Pension Protection Act of 2006 became law. Known as the SECURE Act (for Setting Every Community Up for Retirement Enhancement), the legislation was attached at the last minute to the government appropriations bills for fiscal year 2020.

Major provisions of the SECURE Act include:

  • Increasing the age for required minimum distributions from 70½ to 72
  • Requiring disclosures for how a participant’s balance would translate into a future income stream
  • Modifying the safe harbor around the selection of a lifetime income provider, so fiduciaries can rely on the assurances of state insurance regulators that providers are adequately capitalized
  • Allowing 529 distributions to be used to repay student loans (up to $10,000 annually)
  • Increasing the limit on auto-escalation from 10% to 15%

The bill also paves the way for open multi-employer plans (MEPs) by removing the need for employers in a MEP to share a common affiliation. It also removes the so-called “bad apple rule,” referring to a rule that if one plan in the pool is no longer a qualified plan, the entire pool loses its qualified status.

Bottom Line: Given its sweeping nature, the impact on policy cannot be underestimated within the retirement industry as major changes (target date funds, auto features, etc.) were largely driven by previous regulatory and legislative catalysts.

Posted by

Share
Share on facebook
Share on twitter
Share on linkedin
Related Posts
Defined Contribution

Lost but Not Forgotten: DOL Guidance on Missing Participants

Jana Steele
Jana Steele explains how new regulatory guidance on missing participants affects DC plan sponsors.
Defined Contribution

Department of Labor Provides Cybersecurity Guidance

Benjamin Taylor
An excerpt from an article by Ben Taylor on new cybersecurity guidance.
Defined Benefit

PCE and CPI: What’s the Difference?

Fanglue Zhou
Fanglue Zhou explains how CPI and PCE differ and why the Fed prefers the PCE.
Defined Benefit

Gains for Just About Every Asset Class in 2Q21

Kristin Bradbury
Kristin Bradbury assesses how U.S. and global stock, fixed income, and real assets markets performed in 2Q21.
Defined Benefit

Wall Street Bets on Transitory Bumps in Inflation

Kristin Bradbury
Kristin Bradbury analyzes how the U.S. and global economies and global markets performed in 2Q21, and assesses the outlook coming out of the pandemic...
Defined Benefit

Putting Values into Action: A Practical Guide for Institutional Investors

Brad Penter
Lauren Mathias and Brad Penter discuss how investors can incorporate racial equity into their investment programs.
Defined Benefit

A JOLT of Inflation from the Labor Market?

James W. Van Heuit
Jim Van Heuit discusses recent changes to the labor market and what impact they may have on inflation.
Defined Benefit

Tips on TIPS

Kristin Bradbury
Kristin Bradbury explains TIPS and their potential role in investment portfolios.
Defined Benefit

The U.S. Economy, Now Open for Business

Jay Kloepfer
The U.S. economy may be on track for a truly eye-opening expansion, with initial projections pointing to growth rates of 9% or even higher for 2Q.
Defined Benefit

When the Passive Index Is an Active Decision

Weston Lewis
Because of differences in passive indices, investors should understand how the one they choose will affect benchmarking.