President Donald Trump has signed the Setting Every Community Up for Retirement (Secure) Act into law as part of the year-end spending bill.
Among a host of sweeping retirement planning changes, the new law also allows tax-free 529 college savings plan distributions to be used to pay for registered apprenticeship programs and up to $10,000 in student loan payments. The president put his signature on the legislation late Friday.
SavingforCollege.com applauded Secure’s passage into law and stated that over 30 states offer an additional state income tax deduction or income tax credit for 529 plan contributions.
“Most states have a Dec. 31 deadline to contribute, but a few will allow residents to claim a prior-year tax deduction up until April 2018,” the website explained.
The bipartisan Secure Act “will be transformational for the future of retirement for American workers and employers by modernizing the U.S. retirement system,” Paul Rangecroft, Aon’s head of North America Retirement Consulting and Administration, said via email on Saturday.
More American workers “will have access to qualified, workplace retirement plans through the expansion of open multiple employer plans (open MEPs) and employers will have an enhanced ability to provide valuable retirement benefits and additional plan features,” Rangecroft added.
Through open MEPs “and their cost-efficient institutional investment options and lower administrative costs, American workers at employers of all sizes and industries will reap the added value of these savings,” he said.
Susan Neely, president and CEO of the American Council of Life Insurers, said the Secure’s passage into law “represents a major stride forward in modernizing the way new generations of Americans prepare for retirement, and there’s more work to do ahead.”
The Secure Act “expands access to retirement plans for millions of Americans and allows older workers to contribute more to their IRAs. It also makes it easier for small businesses to band together to provide retirement plans for employees – leading to at least 700,000 new savers,” according to Neely.
As consumers’ “retirement needs evolve,” she added, “we look forward to working with policymakers on additional bipartisan solutions to help all Americans position themselves to achieve financial security in retirement.”
Sen. Rob Portman, R-Ohio, stated that passage of Secure “can help pave the way for bolder reforms” in passage of the Retirement Security and Savings Act, legislation that he has introduced with Sen. Ben Cardin, D-Md.
“I believe the Senate Finance Committee should hold hearings and a markup on this legislation, and I will work closely with Senator Cardin to move it forward,” Portman said.
Several measures included in the Retirement Security and Savings Act (S. 1431) are part of the Secure package, including provisions to expand the eligibility of 401(k)s to include part-time workers that complete between 500 and 1,000 hours of service for multiple years, and to increase the age for required minimum distributions from age 70 1/2 to age 72 in 2020.
Portman hopes the broader set of reforms – 57 specific provisions – of the Retirement Security and Savings Act will be considered next year.
– Related: Seven Possible Obtacles to Secure Act Bliss