The much-ballyhooed SECURE act has been in effect for one year; what does that actually mean?
Matt Munn | Feb 02, 2021
The Setting Every Community Up for Retirement Enhancement (SECURE Act), was officially enacted on January 1, 2020 and is generally considered the largest retirement reform to impact the economy since the Pension Protection Act of 2006. The bill itself is the product of a bipartisan effort to make retirement savings more accessible for less-advantaged people.
Considering the significance of the Act, there are a wide array of tax provisions that may impact you and your business. The Act had two main initiatives. The first was aimed at businesses/employers to entice companies to start new retirement plans or make updates to existing plans in order to attract more participation from employees. The second initiative was focused on individuals. The Act modifies some rules surrounding retirement to simplify how distributions are made and provides opportunities for
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Americans have been facing greater pressure to shoulder the responsibility for their own retirement. The safety net is shrinking, as fewer workers have access to guaranteed pension plans when they retire, funding for Social Security has come under threat, and costs for everything from housing to health care to long-term care continue to rise. Now, with the economic fallout from the pandemic, the uncertainty is growing.
According to Nationwide’s sixth annual
Advisor Authority study, powered by the Nationwide Retirement Institute, roughly three-fourths of investors (72%) say the COVID-19 pandemic has had a negative impact on how long they are able to live off their current retirement savings. Nearly two-thirds of investors (63%) expect to require 20 to 30 years of income in retirement but less than half (47%) think they can live off their savings for that long.
On Friday January 8, the Pension Benefit Guaranty Corporation (PBGC) published a final rule that provides multiemployer pension plans with additional methods to help calculate employer.
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On January 7, 2021, the Pension Benefit Guaranty Corporation (“PBGC”) issued final regulations updating its guidance under sections 4211 and 4219 of the Employee Retirement Income Security Act of 1974 (“ERISA”), which govern the calculation of an employer’s withdrawal liability and the payment of that liability, respectively. Specifically, the regulations provide simplified methods for calculating withdrawn employers’ allocable share of the plan’s unfunded vested benefits disregarding certain benefit reductions and contribution increases, as required by law. The final regulations closely follow proposed regulations that PBGC issued on February 6, 2019.
Background
The Pension Protection Act of 2006 (“PPA”) permits plans in critical status to reduce “adjustable benefits”, which most commonly include early retirement subsidies for participants not in pay status and benefit improvements that have been i
Aggregate investment return of 11.72% wasn’t enough to counter falling interest rates.
Funding for the 100 largest corporate pension plans in the US declined $50 billion last year as their aggregate funding ratio slipped to 88.2% at the end of the year from 89.8% at the end of 2019, according to consulting firm Milliman.
After sharp investment declines in the first quarter, asset returns rebounded strongly during the rest of the year. That rebound helped offset the funded status deterioration that was a result of the discount rates used to value pension liabilities continuing to fall. The funded status deficit of the 100 plans tracked by the Milliman 100 Pension Funding Index (PFI) was at $234 billion at the end of December, which was the lowest monthly funded status deficit during the year.