Rules of Retirement: Possible Changes That Could Affect Employers and Retirees

Rules of retirement could be changing significantly per House bill HR1994, passed on May 23rd. The bill passed by a margin of 417 to 3 and it is anticipated that it will also pass in the Senate and be signed into law by President Trump thereafter.

Referred to as the “Setting Every Community Up for Retirement Enhancement Act of 2019” (a.k.a. “SECURE”), the bill could significantly affect traditional IRAs, 401-K plans, inherited IRAs, required minimum distributions, college savings plans and student loans.

If passed, House Bill HR1994 could significantly affect traditional IRAs, 401-K plans, inherited IRAs, required minimum distributions, college savings plans and student loans.

Aimed at helping Americans save for retirement, the bill modifies the requirements for employer-provided retirement plans, IRAs and other tax-favored savings accounts. Such modifications include:

  • multiple employer plans
  • automatic enrollment and non-elective contributions,
  • tax credits for small employers that establish certain plans
  • loans
  • lifetime income options
  • lifetime income options
  • the treatment of custodial accounts upon termination of section 403(b) plans
  • retirement income accounts for church-controlled organizations
  • the eligibility rules for certain long-term, part-time employees
  • required minimum distributions
  • non-discrimination rules
  • minimum funding standards for community newspaper plans
  • Pension Benefit Guaranty Corporation premiums for CSEC plans (multiple employer plans maintained by certain charities or cooperatives)

HR1994 also includes provisions that:

  • treat taxable non-tuition fellowship and stipend payments as compensation for the purpose of an IRA
  • repeal the maximum age for traditional IRA contributions
  • treat difficulty of care payments as compensation for determining contribution limits for retirement accounts
  • allow penalty-free withdrawals from retirement plans if a child is born or adopted
  • expand the purposes for which qualified tuition programs (commonly known as 529 plans) may be used
  • reinstate and increase the tax exclusion for certain benefits provided to volunteer firefighters and emergency medical responders
  • increase penalties for failing to file tax returns
  • require the Internal Revenue Service to share tax information with U.S. Customs Border Protection to administer the heavy vehicle use tax

HR1994 will make it easier for companies to form or join multiple-employer defined-contribution plans so employers in the same industry or geographic region can join forces to offer potentially better 401-K plans with better choices than what an individual plan offers.

Currently if one employer violates its fiduciary duty, then all employers are liable. This bill would eliminate that. In addition, the commonality requirement would be removed so that financial institutions that administer 401-K plans could offer national and potentially more cost-effective plans to small employers.

The bill delays the minimum distribution age to 72. Currently distributions begin at age 70. The bill also allows seniors working past the age of 70-1/2 to contribute to a traditional IRA. By moving the minimum distribution age to 72, it allows a bit more time for people to grow their tax-deferred account(s) – even if ever so slightly. It is important to note though, that it may be better to take required distributions prior to 2026 as there is an anticipated rate hike when the Tax Cuts and Jobs act of 2017 ends in December 2025. The bill does not affect those who turn 70-1/2 before January 1, 2020.

As the law stands now, a person who inherits an IRA or 401-K type account can withdraw the money over their entire lifetime. The new bill would require money be withdrawn over a 10-year period, although the deadline won’t apply to an owner’s surviving spouse or minor children.

One of the bill’s authors, House Ways and Means Committee Chairman Richard Neal (D-Massachusetts) said in a statement that he is proud to “…incorporate a much-needed fix to reverse unfair and unexpected high taxes on Gold Star families, low-income scholarship recipients, and children of fallen first responders, among others.” Neal went on to say, “I encourage the Senate to follow our lead and swiftly pass this important bill that goes a long way in helping American families prepare for a financially secure retirement.”

For more information on the bill, as well as a list of the wide-sweeping changes to the employer plans, go to and

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