The Setting Every Community Up for Retirement Enhancement (SECURE) Act has dramatically changed ERISA plans, affecting employers and workers in Texas and Oklahoma. Knowing these changes is key to following rules and getting the most from retirement benefits.
Key changes under the SECURE Act
The SECURE Act has brought several significant updates to retirement plans:
- Higher Required Minimum Distribution (RMD) age: RMDs have increased from 70½ to 72. This change lets people keep their savings invested longer, maybe growing their retirement funds.
- More part-time workers can join: Workers who work at least 500 hours per year for three years can now join 401(k) plans. This helps part-time workers save for retirement.
- No penalty for taking money out for birth or adoption: People can take up to $5,000 without penalty from their retirement accounts for the costs of having or adopting a child, giving new parents more financial options.
These changes aim to make retirement more secure and give people more choices.
What this means for employers in Texas and Oklahoma
Employers in Texas and Oklahoma must adapt to these changes to follow the rules and improve their retirement plans. Here are some steps to think about:
- Check and fix plan documents: Your papers should show the new RMD age and rules for part-time workers.
- Tell workers about changes: Inform your workers about the new rules, especially who can now join and how they can withdraw money without penalty.
- Look at how you manage the plan: Check how you run the plan to handle the new rules and ensure smooth operations. Doing these things can help your workers reap all the benefits of the SECURE Act.
Benefits for workers
For workers, the SECURE Act offers several benefits:
- More time to invest: The higher RMD age gives more time to invest, which can lead to more money saved for retirement.
- Part-time workers can join 401 (k) plans: More part-time workers can now join 401(k) plans, which can help them save more for retirement.
- More financial choices: Taking money out without penalty for birth or adoption costs gives financial help during significant life events. Knowing these good things can help workers make better retirement planning choices.
The SECURE Act marks a significant change in retirement planning. By staying informed and taking action, employers and workers in Texas and Oklahoma can handle these changes well and make their retirement more secure.