3 ways the new retirement bill, SECURE ACT will change the way you save for retirement

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The House of Representatives just passed the SECURE Act – Setting Every Community Up for Retirement Enhancement.  The bill will now go to the Senate and should make its way to the president’s desk.  The bill is expected to impact most Americans who prepare for retirement at different stages of their lives. 
Here are some of the key changes to retirement: 

Help for part time workers and small business owners

Only 51% of workforce is covered by retirement savings plan through their workplace.  To rectify this issue, the new bill involves provisions that encourages employers to provide retirement savings plans (particularly to part time workers). 

The bill will provides tax credits and incentives for employers offering retirement plans with auto enrollment and allows employers to join multiple employer defined plans to help the cost incurred by small business owners.  

Help individuals save longer

Many Americans are entering retirement with fewer saving assets.  To rectify this issue, the bill allows individuals to save more by increasing the age to 72 for withdrawal of retirement savings.  Currently, individuals are required to withdraw from their retirement at 70 1/2.  In addition, those who are saving into traditional IRAs now have until the age 72.

Help individuals with student loan repayment and child expenses

The new bill allows for individuals to withdraw money from 529 educational savings plans to repay student loans. Individuals can utilize up to $10,000 for repayment. In addition, this bill will allow for the withdrawal of retirement funds to cover birth and adoption costs up to $5,000.

Kemcents Tip

In light of the new retirement bill, this may be a good time to consider a 529 plan. Keep in mind, savings that you contribute to the state’s 529 plan allows for matching depending on your income. Thus allowing you to save more and potentially be able to utilize for student loan repayments.

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