Importance of the New Law Providing Workplace Retirement Plan in Corona virus
President Trump signed the Setting Every Community Up for Retirement Enhancement (SECURE) Act into the law on December 20, 2019. Significant time has passed since then and every employer should be aware of it by now. This is one of the recent legislations designed to make an employee’s life better. This Act is meant to push the employers. They must participate in creating and maintaining a workplace retirement plan for all their employees. There are many provisions in the plan. Some of the provisions are especially beneficial to small business employers. There are also provisions that address the dynamic demographics in the workforce, such as longer life expectancy, blurring lines between genders etc.
Every employer must be aware of how the provisions within SECURE Act may affect their already existing workplace retirement plan. There are many opportunities which may allow an employer to use an employer-sponsored retirement plan with a brad applicability.
What are The Major Provisions of SECURE Act?
The SECURE Act allows a number of rules related to workplace retirement plan be tweaked. Such as;
- It makes it easy for small business owners to arrange 401(k)s for their employees by increasing the cap from 10% of wages to 15%.
- Provides an annual max tax credit of $500 to those employers who provide 401(k) to their employees.
- It also allows the employers to offer workplace retirement services to those employees who work only part time i.e. approx. 1000 hours in a year.
- This Act reduces the liability if the insurer is unable to meet the financial obligations.
- The shifting demographics will have certain effects. The overall improvement in quality of life will affect the age of retirement too. This Act encourages workplace retirement plan participants to retire from 70½ to 72.
- It allows the employer to make use of tax-advantaged 529 accounts for employees working to pay off student loans.
- If the employee has a child born or adopted, they can take a withdrawal of $5,000 from the 401(k) account absolutely free of a penalty.
- It removes the fear of legal liability from the employer if they fail to provide a lowest cost plan. This allows the employers to include more annuities in workplace retirement plan, such as 401(k).
How is Corona virus Affecting Workplace Retirement Plan?
The COVID-19 outbreak has hit every sector of United States very hard. The time is tough on everyone. As a result, the economic measures to combat this disease could negatively impact the retirement plans of millions of Americans. Many people are forced to dip into their workplace retirement plan to pay for amenities, due to lack of earnings. Consequently, many other employees are being laid off, who will not have the income to make premium contributions anyway. However, several changes by the government could help in keeping you from falling into despair.
- The required minimum distributions (RMDs) have been put on hold.
- The penalties for withdrawal from plans have been eased. The applicants can draw up to $100,000 from their workplace retirement plan in 2020.
- The applicants can take larger loans against their 401(k)s.
- The rules in current 401(k) have been eased to relieve the stress.
Getting Access to Workplace Retirement Plan in Dallas, Texas
SG Financial has established itself in the market as one of the most trusted names in the market for insurance. You must comply with the law and start offering a decent workplace retirement plan to your employees. As a result, it will bring greater loyalty, gratitude and ease into their lives. Not to mention, it will be incredibly good for the future of your employees. This is not just a legal order. It is also a way to preserve the future against the uncertainty that has gripped American Nation in the wake of Corona virus.