SECURE Act (part 3)

Michelle Bertram and Beverly Bertram are financial advisors living in Mineral Point WI and serving the surrounding communities. Michelle Bertram does financial planning for retirees along with business consulting. Beverly Bertram specializes in retirement planning and income planning for her clients. Michelle Bertram and Beverly Bertram are authors of the book, Creating You DREAM Retirement and creators of the DREAM Retirement Process. Serving Madison WI, Verona WI, Mount Horeb WI, Barneveld WI, Dodgeville WI, Dubuque IA, Platteville WI, Lancaster WI, Cuba City WI, Fennimore WI, Darlington WI, Monroe WI, Spring Green WI, Black Earth WI and beyond

A SECURE Act provision will make it easier and less expensive for small business owners to set up retirement plans for employees. The new rule will let more small businesses band together to offer what are called Multiple Employer Plans or MEPs.

However, it could be a few years before small business employees without retirement plans see their employers offer them as a result of the SECURE Act. The law’s MEPs provisions don’t take effect until 2021. Additionally, the U.S. Department of Labor will need to clarify the rules before many small business employers will feel comfortable providing retirement accounts.

The SECURE Act aims to allow more part-timers to save through employer-sponsored retirement plans, starting in 2021. In some cases, these workers will need to put in at least 500 hours a year for three consecutive years in order to be eligible for the plans.

Small business owners, keep a lookout for clarity to these rules and new opportunities that you may be able to take advantage of.

The SECURE Act will also encourage employers with retirement savings plans to let employees convert their savings into guaranteed lifetime income, through annuities. Employers will be protected from being sued if the insurer they choose to make annuity payments doesn’t pay claims in the future.

For Example, TSP currently provides an immediate annuity through MetLife. This annuity provides lifetime income for an individual or joint-life with a spouse. However, there are disadvantages of this, especially if you choose to transfer your entire TSP balance to the annuity, if you choose life only and die young, there is nothing left for beneficiaries and if you need to access a lump sum for any reason later you do not have the option to do so.

It will likely take years before many employer-sponsored retirement plans offer annuities due to the SECURE Act and when they do, it will be important to still consider your options carefully. There are many annuities, unlike the one the TSP currently offers that offer lifetime benefits and still allow you the flexibility to take additional withdrawals if needed, as well as pass any remaining balance to your loved ones.

The fact remains, it is your responsibility to plan for retirement and there are always better options available outside of government-sponsored plans. It is important to look at what is best for you!