Your 401(k) could soon include new types of investments

Significant changes could occur retirement plan.

The Senate passed the Security Act Thursday as part of its massive spending package. The House passed it earlier this week and is now addressing President Donald Trump, who is expected to sign it as law.

The Security Act, which stands for Configuring All Communities for Improving Retirement, is designed to help more people set aside more money for retirement. It does so primarily by removing some of the obstacles that prevent people from saving. It also opens the door to new types of products, such as annuities, that could help workers ensure reliable income streams during retirement.

Among its highlights is a provision that will make it easier for small businesses to come together to offer retirement plans to their employees. It also opens the door for long-term part-time employees to have access to job retirement plans. Investment advisers applauded the passage of the bill, which comes at a time when 22 percent of Americans have less than $ 5,000 saved for retirement, according to Northwestern Mutual.

“Legislation includes significant changes that will allow more people to participate in labor savings plans and should have a positive impact on the retirement of millions of Americans,” said investment management firm T. Rowe Price at a statement.

Minimum age of distribution required

The Secure Act also raises the age that Americans must start taking out of retirement savings, known as the required minimum distribution age, from 70½ to 72 years, as people live and work longer. . It also offers more years for people to contribute to individual retirement accounts, for the same reason.

It creates new rules that could expand lifetime income options within work plans, such as annuities. It aims to help people establish reliable income streams during retirement. It will also make it easier for employees to transfer retirement plan assets when they change jobs.

It also corrects a component of the 2017 tax review that raised taxes on benefits received by relatives of deceased military veterans, as well as taxes on some Native American students and tribal members.

It is widely considered the most important piece of retirement legislation since the Pension Protection Act of 2006. The Security Act had bipartisan support among lawmakers, as did many of the financial and retirement sectors.

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