The full Senate passed by a 71-23 vote Thursday the Setting Every Community Up for Retirement Enhancement (Secure) Act as part of the year-end spending bill.
The spending package is expected to be signed into law by President Donald Trump on Friday as the current continuing resolution funding the government expires.
Andy Friedman, founder and principal at The Washington Update, told our sister site ThinkAdvisor that the Secure Act, H.R. 1994, "affects IRA and 401(k) account holders favorably by increasing the RMD age and eliminating restrictions on IRA contributions for certain workers."
The sweeping retirement bill also "curtails the use of 'stretch IRAs,'" he said, "although that strategy remains available."
Friedman pointed to other important aspects of the Secure Act that he said are receiving less attention. For instance, Secure expands "the availability of 401(k) plans for small businesses, and that facilitate the use of annuities in 401(k) plans," opening up an opportunity that broker-dealers have overlooked.
"Now that small businesses may band together in a single 401(k) plan, a broker-dealer can set up a plan and offer it to small-business clients and potential clients," Friedman, former tax attorney for the NFL, explained. "Doing so provides a needed service to small businesses, and an opportunity for the firm to collect assets."
The annuity provisions also provide plan participants "with an option to receive lifetime payouts," he said. "I suspect it will take a while for plans to avail themselves of this opportunity. Plan sponsors will need time to understand how annuity contracts work. They then will have to prepare materials explaining the contract terms to participants."
Sen. Patty Murray, D-Wash., ranking member of the Senate Health, Education, Labor and Pensions (HELP) Committee, applauded passage of Secure, stating the bill helps "bolster retirement security for families across the country and address the fact that too many people face too many barriers to having the financial security they will need in retirement."
Murray said she's "particularly pleased we were able to take a step I've long pushed for to expand access to retirement plans to long-term, part-time workers. This will help millions of people across the country, and be especially helpful to women across the country who face an even steeper climb to retirement security, and who are the majority of long-term, part-time workers."
The American Council of Life Insurers estimates that Secure will result in 700,000 more American workers saving for retirement.
"The big winners with the enactment of the SECURE Act will be American small businesses and especially workers preparing for retirement," said Kevin Mayeux, CEO of the National Association of Insurance and Financial Advisors, in a Thursday statement. "SECURE gives more workers the opportunity to prepare for retirement and gives all retirement savers greater flexibility to create plans meeting their individual needs."
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Melanie Waddell
Melanie is senior editor and Washington bureau chief of ThinkAdvisor. Her ThinkAdvisor coverage zeros in on how politics, policy, legislation and regulations affect the investment advisory space. Melanie’s coverage has been cited in various lawmakers’ reports, letters and bills, and in the Labor Department’s fiduciary rule in 2024. In 2019, Melanie received an Honorable Mention, Range of Work by a Single Author award from @Folio. Melanie joined Investment Advisor magazine as New York bureau chief in 2000. She has been a columnist since 2002. She started her career in Washington in 1994, covering financial issues at American Banker. Since 1997, Melanie has been covering investment-related issues, holding senior editorial positions at American Banker publications in both Washington and New York. Briefly, she was content chief for Internet Capital Group’s EFinancialWorld in New York and wrote freelance articles for Institutional Investor. Melanie holds a bachelor’s degree in English from Towson University. She interned at The Baltimore Sun and its suburban edition.
