Our third and final blog on The SECURE Act will focus on the changes to employer sponsored plans.
401K's added for Part Time Employees
Part time employees haven't had the ability to save into an employer sponsored plan until they worked 1,000 hours. The SECURE Act has changed the rules slightly, which will give part time employees a chance to save for their future. Starting in 2021, a part-time employee can save into their company's 401k plan if they have worked 500 hours per year for three consecutive years. They also must be at least 21 years old at the end of the three year period.
Annuity Rule Changes
You may be receiving some new documents in the mail pertaining to your 401k. The SECURE Act will now require plan administrators to provide annual lifetime income disclosures to the participants. The statement will show you a monthly benefit if you rolled your 401k into an annuity.
Penalty-Free Withdrawals for Birth or Adoption of Child
Welcoming a baby into your family is an exciting time!Whether its hospital bills or adoption fees, the arrival of a bay can also be costly.
Your retirement account can now help you pay for the birth or adoption of a child. The new law allows you to take up to $5,000 after the birth of your child or adoption of a child. Typically, this would incur a 10% early withdrawal fee. The SECURE Act now waives the early withdrawal fee but you would still be responsible for income taxes on the distribution.
If you would like more information, or to look into how this may affect you personally, click here SixPoint FP!