The Secure Act attacks the retirement savings problem from several angles. Among its other provisions, it would expand the ability of plan providers to include annuities in the plans. Today, many 401(k) sponsors stay away from annuities, in part because of concerns about liability in picking an annuity provider. The new rules allow firms to select annuity providers without fear of being held liable if the annuity runs into trouble; that opens up a path for more annuities to be offered inside retirement plans.
The bill also provides a $500 credit for small employers who set up automatic enrollment provisions for their employer-sponsored plans, which has been shown to increase employee participation in savings plans.
In addition, the law increases the age for required minimum distributions from 70.5 years to 72 years. Currently, most individuals have to take money from their retirement savings at the younger age.
“Increasing retirement savings is a long-term problem,” Reich says. “But the Secure Act is a good start. Creating more employer-sponsored plans will help a tremendous amount of people.”