Posted by (American Life Insurance Guide Network 12/22/2019 News) US President Trump signed the “Pension Bill” just passed by Congress last Friday (December 12).Retirement pension systemReforms paved the way.How does the reform of the American pension system change? "What impact does it have on me? Why is it a major benefit for the US insurance industry?The following is a report sent back by a community reporter.
What is the pension bill?
The Pension Act, The SECURE Act, is the abbreviation of "Setting Every Community Up for Retirement Enhancement".Retirement plan systemThe first major reform.
The ins and outs of the pension bill
According to the American Life Insurance GuidePrevious report, On April 4, the House Ways and Means Committee, which is in charge of U.S. national taxation, passed and submitted the “retirement pension” to both houses of Congress.Bill (draft). "
After six months of revisions, last week (December 12-17), Congress passed the "Superannuation bill"And put it on President Trump's desk.
Only one day later, US President Trump signed the bill, and the pension bill came into effect, launching a major reform of the pension system for the American people.The following are the core changes in the "Pension Act" and their impact on us.
New annuity insurance in 1.401(k)
The "Superannuation Act" allows employers to includeAnnuity insuranceAs an investment option.
At present, employers have a fiduciary responsibility and have the responsibility to ensure that these investment products are investment portfolio choices that are in line with the interests of employees.According to the provisions of the “Pension Funds Act”, the responsibility of “providing reasonable investment options” is transferred to the sale ofAnnuity insuranceOfFinancial insurance companyBody.
2. Increasing the age requirement for withdrawing money and increasing the payment age
The existing regulations for retirement accounts are that IRA and 401K accounts must be forced to follow a minimum required amount called "RMD" every year after the age of 70.5, withdraw money from the account, and there is a fine for not withdrawing money. The "Superannuation Act" raises the mandatory age for withdrawal to 72 years old.
Simultaneously,The "Superannuation Act" also abolished the maximum deposit age limit for traditional IRA accounts and no longer limits it.The current rule is that the upper limit of deposit age is 70.5 years old. After 70.5 years old, you can only withdraw money, not deposit money.
3. Compulsory withdrawal of money within 10 years, Stretch IRAs are not allowed
Stretch IRA, sIRA for short, is one of the most advantageous ways to inherit large accounts.
Because IRA (Individual Retirement Account) has tax advantages, young heirs have more time to enjoy the increase in tax advantages of this account at the cost of having to withdraw a small portion of the amount (RMD) each year, so almost unlimited Wealth circulation and inheritance.Therefore, before the signing of the "Superannuation Act", the strategy of Stretch IRAs had great advantages in wealth inheritance or estate planning (Detailed description).
The "Pension Funds Act" compulsory provisions,The beneficiary must withdraw funds from the IRA account within 10 years, Put an end to Stretch IRAs.
4. Encourage employers to set up "auto-join" retirement plans
The new bill encourages employers to set up "auto-join" retirement plans for employees.
Under the provisions of the "Superannuation Act", if a small employer provides a 401(k) retirement plan or a SIMPLE IRA retirement plan that "employees automatically join", then the small employer can get an additional amount on the basis of the "start-up tax deduction" The new tax deduction amount to offset the cost of setting up a retirement plan.
From one perspective, "automatic joining" is a very simple and effective way to help people form the habit of compulsory saving for the future.
At the same time, the "Pension Funds Act" stipulates thatPart-time employees who have worked more than 1 hours in one year or at least 1,000 hours in three consecutive years are allowed to join the employer’s retirement plan.
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Industry Commentary
Columnist of American Life Insurance Guide Ben It is believed that the signing of the "Pension Pension Act" is the first major reform of the American people's retirement plan system since 2006, which will inevitably affect all of us.
Annuity insuranceThe use in retirement accounts brings us new retirement options.But at the same time, due topensionIn order to avoid "unnecessary" fines, "complex" tax issues, and possible high related costs, we need to do our homework carefully and configure with the help of professional consultants.
Increasing the age requirement for withdrawing money and increasing the age of payment are in line with the social status quo of the increasing number of "retirement" working groups in the United States to a certain extent.The House Ways and Means Committee stated in the summary of the bill: "As Americans live longer, more and more people continue to work after reaching the traditional retirement age."
The delivery strategy of suppressing IRA has improved social efficiency to a certain extent, and at the same time increased tax revenue channels for the government.Based on this, some media commented that the new "Pension Bill" is another "tax harvesting weapon" of the US government.From the perspective of the relevant policies and tax incentives for small and medium companies, it is a win-win situation: ordinary employees have more channels to join pension plans, small and medium companies enjoy tax incentives to set up welfare plans that can retain talents, and insurance companies Then got an enlarged market.
Although extreme political critics believe that"Superannuation bill"The signing of is a major victory in lobbying by the US insurance industry.But it is undeniable that in the process of amending this bill, Congress has grasped the dynamic balance between the public rights of society and the commercial interests of insurance companies to a degree that satisfies most people, and finally formed it. A kind"Win more"Situation. (Finish)
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The U.S. retirement account system has been reformed for the first time in 13 years.What does it mean to us?
