Secure Act Explained

From the beginning, 2019 seemed to be the year of retirement for Congress. Last year ended with a series of developing retirement bills that were submitted to DC, committees, panels, and lobbyist. We are ready to adopt relevant legislation.

And we now have the first real gesture of the year: The Setting Every Community Up for Retirement Enhancement Act approved by the Chamber of Deputies with a vote of 417 against 3 on Thursday, which should be submitted to the Senate in the current legislature.

The SECURE Act would be the first significant retirement legislation after the Pension Protection Act of 2006. This happens after the 2017 labor law, and the labor courts have been severely sanctioned by all the essential provisions of the reform, which were initially discussed in the Trump administration.

Although the bill contains substantially 29 new provisions or significant amendments, I want to focus on only eight areas. An important note: the SECURE Act has not been finalized yet. The Senate has a similar bill before being called the Retirement Enhancement Securities Act (RESA) and, as is often the case, some of its provisions can enter SECURE Act or parts of the law. SECURE Act can be changed by a committee or other action before Congress before it can then be signed into law.

Although the law facilitates some retirement savings blocks, such as eliminating the age limit of the IRA, lengthening the start date of the RMDs, increasing annularity options and possibly the opportunity for small employers to start planning their retirement, there is still a strong argument that these changes, while positive, will not significantly displace pension security. Many of these changes can only be considered for the benefit of wealthy IRA owners who do not yet need RMDs and a clear signal for lobbying their products.

The major challenges facing retirees for most Americans are still the funding of social security, the rising cost of health care due to rising drug costs, Medicare and Medicaid pressures, and about one-third of the American population that does not spare for retirement, they are small and changes to savings plans will probably help this group. This does not mean that the provisions of the SECURE Act are not positive changes; they simply will not do much to solve the real pension problems facing Americans. 

That being said, the current version of the SECURE Act contains eight main parts which, in my opinion, deserve further analysis.