Published December 14, 2020 – The Setting Every Community Up for Retirement Act (SECURE Act) was signed into law by the President of the United States on December 20, 2019. The objective of the law is to help all Americans save for retirement. While the SECURE Act made many additions and changes to employees’ retirement plan especially for smaller businesses there were two big changes for larger benefit plans and they are:
- Changing the age to start taking Required Minimum Distributions (RMD’s)
- Employers are now required to offer their retirement plan to long-term part-time employees
Changing the age to start taking RMD’s
With the passing of the SECURE Act, participants start taking RMD’s by April 1st of the year the participant reaches age 72 and this is effective for participants whose date of birth is July 1, 1949 or later. For example:
- If a participant was born on June 30, 1949, the participant must follow the old rules and take RMD’s by April 1st of the year the participant reaches age 70 ½ or April 1, 2020
- If a participant was born on July 1, 1949, the participant must start taking RMD’s by April 1st of the year the participant reaches age 72 or April 1, 2022.
Offering retirement plans to long-term part-time employees
With the passing of the SECURE Act, employers must offer long-term part-time employees’ eligibility to their retirement plan. A long-term part-time employee is defined as an employee who has worked at least 500 hours per year for the previous three years. It is important to note that the hours prior to 2021 are not considered. Based on these rules, the earliest entry for these employees would be January 1, 2024.
This article is an excerpt from Dopkins Employee Benefits Newsletter. To read the complete content, please click here.
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About the Author
Vincent Pasini CPA
Vincent Pasini holds extensive experience in contract design, management and review/audit of financial statements.