Much has been made about the increase in the required minimum distribution age to 72 and the reduction of the Stretch-IRA, but what about plan coverage? The SECURE Act is attempting to increase plan coverage for Americans. Despite having IRA’s, Simple-IRA’s, SEP-IRA’s, 403B’s, 457b’s, 401K’s, etc. available, the number of American covered under a workforce retirement plan has stayed roughly the same. These plans are also one of the few places that Americans do a good job saving for long term retirement needs.
In the SECURE Act, for employers starting a new plan, they can receive tax credits up to $5,000 for the first three years of a plan. There is also a credit for those plan sponsors who start a new plan with automatic enrollment or amend their plan to allow automatic enrollment of up to $500 for the first three years. If start up costs were an issue, this bill provides ample incentive to get a plan going. This bill also provides some additional incentive for employers who were considering automatic enrollment but for a number of reasons have yet to adopt it.