The Son of SECURE
Here We Go Again
Key Points – The Son of SECURE:
- The Son of SECURE
- What Changes are in the Son of Secure
- 3 minute read
The Son of SECURE
Let’s rewind and review the Setting Every Community Up for Retirement Enhancement Act of 2019, better known as the SECURE Act. It initially passed the House in July 2019 and was approved by the Senate on Dec.19, 2019. This bill includes meaningful provisions targeted at increasing access to tax-advantaged accounts and tactics to prevent Americans from outliving their assets.
Fast forward to today, on May 5th of 2021, the House Ways and Means Committee passed the 2.0 of the SECURE Act, nicknamed the Son of the Secure, officially known as the Securing a Strong Retirement Act of 2021.
You have to appreciate lawmakers for their cleverness of naming the bill. When I read Securing a Strong Retirement, I couldn’t help but ask: How on earth do individuals know if they are on track to secure a strong retirement? What is your financial strength? How do you demonstrate financial security? How do you navigate your retirement when significant changes are on the horizon from lawmakers?
I couldn’t help but visualize strength in the more traditional sense and thought of the World’s Strongest Man Competition. I went to their website to see how they define the champion:
What it Takes to Win the Title
The World’s Strongest Man competition is about more than just force: it is about stamina, skill, tactics, training, and strategy.
The World’s Strongest Man competition clarifies how to compete on this global stage and how to become a champion.
Your retirement is not that easy, lawmakers consistently change your retirement platform, and retirees need clarity on how these laws change their strategy. How you optimize your financial strength will allow you to become the champion of your retirement title. This only underlines the fact that achieving financial security is a challenging process that requires careful planning and follow-through.
What Changes Are in the Son of Secure?
What tactics are lawmakers proposing to enhance your financial muscles with the Son of Secure? Ed Slott and Company notes some specifics:
- Roth, Roth, Roth, and more Roth, and we love it! Highlights:
- SIMPLE and SEP Roth IRAs
- Catch-up contributions would be required to be made to Roth plan accounts.
- Employer matching contributions made as Roth contributions
- If passed, the government may be excited about the immediate revenue they receive through after-tax Roth contributions
- 2.0, the son is looking to extend further the required first-year required minimum distribution (RMD) age over time from age 72 to age 75, prior to 2020, the age was 70 1/2
- Indexing $1,000 IRA catch-up contributions for inflation, inflation factors allow for stronger savings
- Save more with increasing the limit on catch-up contributions to 401(k) and other plans for individuals who have attained critical planning ages of 62, 63, or 64
- Allowing matching contributions on student loan payments
- Eliminating the requirement that premiums for QLACs be limited to 25% of an individual’s account balance
- The penalty for RMDs to reduce from 50% of the shortfall to 25%
- IRAs to include the IRS self-correction program (EPCRS)
- Enhancing charitable opportunities by indexing the $100,000 Qualified Charitable Distribution (QCD) limit for inflation and allowing a once-in-a-lifetime QCD to a split-interest entity such as a charitable remainder unitrust
- Private-sector firefighters’ access to an earlier retirement by changing the age 50 exception to the 10% early distribution penalty
- Changing the rules for when the statute of limitations begins for the excise tax on excess IRA contributions
- 3-Year limit of repayment of qualified birth or adoption distributions.
- Allowing in cases of domestic abuse, individuals free withdrawals from IRAs and retirement plans
- Limit the loss of tax-deferred treatment to the portion of an IRA involved in a prohibited transaction
There is no doubt that DC will continue to pass new laws, and you need to be equipped. You need to understand the Son of the Secure and how you strategize for that retirement title. Financial strength means different things to different people. Defining your security and strength requires a strategy to be in place. Your financial plan gives you control to flex your muscles through changes in law and life confidently.
If you have questions about how to prepare your plan for the future, schedule a complimentary consultation below.
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The views expressed represent the opinion of Barber Financial Group an SEC Registered Investment Advisor. Information provided is for illustrative purposes only and does not constitute investment, tax, or legal advice. Barber Financial Group does not accept any liability for the use of the information discussed. Consult with a qualified financial, legal, or tax professional prior to taking any action.