SECURE ACT: Changes Are Coming to Retirement Savings Rules

Babs Harmon 03.10.20
Woman with money

Please visit our COVID-19 resources page with more information for business owners and employees.

If you already have a retirement savings plan, either through an Individual Retirement Account (IRA) or a 401(k) savings plan through your employer, you may want to pay attention.

With the new Setting Every Community Up For Retirement Enhancement Act of 2019 (SECURE Act), there are going to be some changes to the retirement savings rules. We’ve highlighted just a few of the key changes that we believe are meaningful to you. For a complete, official summary of the act, visit congress.gov

1. Required Minimum Distributions (RMD) 

The new law pushes back the oldest age at which you will be required to start withdrawing money from those retirement accounts. It was 70½ years of age, but it’s increasing to 72 years of age. This means savings can grow for a longer period of time if you’re not ready to take money out of your retirement account yet.

2. Long-Term Part-Time Employees

Under the SECURE Act, long-term part-time employees may now be eligible to participate in the plan. If a part-time employee has worked at least 500 hours for three consecutive years and meets the minimum age requirement for eligibility to participate, the employee must be offered the opportunity to do so. 

This requirement goes into effect for plan years beginning after December 31, 2020; however, this doesn’t mean part-time employees have to be included in 401(k) plans starting in 2021. Instead, it means employers must begin tracking hours for eligibility purposes, so employers have some time to prepare. Additional guidance and exclusions are listed in the official summary of the act. 

3. Birth/Adoption Distribution

New parents can now withdraw funds to help pay for childbirth or adoption expenses up to $5,000 during the one-year period beginning on the date the child is born or adopted. This distribution is not subject to the 10% early withdrawal penalty. 

For more information or questions contact the Nextep retirement team at 401k@nextep.com.

Disclaimer: The information provided is not written or intended as specific tax or legal advice.  

Also on Nextep

8 Easy Ways to Save Money on Health Care Costs Admittedly, there are many things out of your control when it comes to healthcare costs. But, there are still steps you can take that add up to more dollars in your pocket. Following these tips can help save money on health care costs. Use preventive […]
Read more
Virtual doctor visits via telehealth are on the rise We’ve long touted the benefits of telehealth. These virtual doctor visits, conducted via phone or video rather than in-person, are a great way to get help for several health issues. Commonly handled diagnoses include Allergies Bronchitis Earache Sore throat Sinusitis Tobacco cessation Pink eye Strep throat […]
Read more
At Nextep, we know the end of the year brings taxes top of mind for many. It also may be easy to forget about 2023 benefit limits that can impact your taxes.  Partnering with a PEO like Nextep means you can easily get all the details you need. Here is a cheat sheet of some […]
Read more
The IRS has released FSA and HSA limits for 2023. A flexible spending account (FSA) allows you to deduct a set amount of pre-tax money from each paycheck to pay for certain IRS-qualified out-of-pocket health expenses, such as medical copays, dependent care, prescription drugs, transit, and parking. Aside from the annually allowed rollover amount ($610 in […]
Read more
While Nextep always offered personalized benefit support to your people, we’re taking it to a whole new level with Health Advocate! Nextep clients and their employees will always get an optimal benefits experience with one-on-one consultations to manage their health questions.  “I’ve personally experienced the headache of trying to choose the right benefit plan for […]
Read more
Finding a PEO can be a daunting task. You should feel confident in your partnership with Nextep or any PEO for that matter. To ensure you do, we’ve put together a short checklist of questions to ask in your meetings with PEOs.  1. What accreditations and certifications do you hold?  A few credentials you’ll want […]
Read more
“[Switching to] Nextep was a no-brainer. The costs are better and the amount of personalized attention and follow-up we received right off the bat was really impressive. With Nextep, we’re not just a number. Nextep is so responsive to our questions and our needs. We didn’t have that in the past with our previous provider.” — Yaicha, […]
Read more
Telehealth services like Teladoc® can provide 24/7/365 access to a doctor by web, phone, or mobile app.  Whether you have a minor illness or a chronic condition, telehealth has become an essential tool for many employees by saving them time and money. A National Library of Medicine study shows people using their telehealth are more engaged in their health care. […]
Read more
With a vast range of individual and family situations, it’s essential to provide benefits that meet your employees’ needs wherever they are in life.  Much like your workplace policies, your employee benefits should align with your diversity and inclusion (D&I) goals. Look at your benefits annually and ask yourself if they reflect your workforce’s needs, […]
Read more
Even before the pandemic, no one wanted to sit in a doctor’s waiting room feeling ill or with a sick child.  Now, with COVID-19 cases on the rise and winter’s seasonal illnesses upon us, it’s more important than ever to have a telehealth option for your employees.  At Nextep, we partner with Teladoc® to offer […]
Read more
It’s time to prepare for next year’s medical expenses, but it can be tough to know how much to set aside.  That’s one advantage of enrolling in a flexible spending account (FSA) or a health savings account (HSA). It allows you to prepare for expected and unexpected medical expenses. An FSA and HSA allow you […]
Read more
Americans are spending less and stashing away more cash than ever, but healthy financial habits are still essential. According to the U.S. Department of Commerce, people were saving about 7.5% of income before the COVID-19 pandemic and now are socking away 14%. People may be saving more because of fear of job loss or because […]
Read more

Download Our App