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The SECURE Act passed by Congress last week and signed by President Trump is likely to change the retirement savings options for senior citizens.

SECURE Act: What It Is, What It Does

The SECURE Act allows senior citizens to contribute to their retirement plans over a longer period of time. The reason? People are living and working longer, therefore the bill allows people older than 701/2 to contribute to IRAs. The bill also pushes back the age at which seniors must take distributions to 72.

This change gives employers the ability to offer annuities in their retirement plans, which means guaranteed monthly payments for you and your spouse. If you change jobs, you can transfer the annuity to the new employer’s plan without incurring paying fees and charges.

Effects On Seniors

With this new law, small businesses that don’t offer retirement plans, can now join other businesses to create multiple employer plans, or MEPs. These plans will be cheaper for small companies, because they can share administrative costs. The bill also will give a new tax credit of up to $500 per year to employers to defray startup costs for new 401(k) plans and SIMPLE IRA plans that include automatic enrollment.

Moreover, part time workers can now get their own retirement plan. Currently, you must be a full-time employee with 1,000 hours of work per year to join an employer retirement plan. The new bill now gives this perk to employees who have worked 500 hours per year for three consecutive years to join. This provision begins on Jan. 1, 2020.

On the other hand, there is a negative. Currently, if you children are beneficiaries, they can spread out payments from the plan over their lifetime. The bill, however, puts a 10-year limit during which the beneficiary must take withdrawals from an inherited IRA. Failure to withdraw funds within the 10-year window incurs a 50 percent tax penalty on assets remaining in the account.