The SECURE Act, passed in late 2019, is shaping up to shake up the retirement plans world.
There has been a lot of talk about this new law and another way it will shape retirement plans is the mandate that 401(k) statements need to show how much monthly income the investor could have if they use their balance to buy an annuity.
While it is definitely a good thing to see how your retirement plans can work for you, how to accurately portray these figures and calculations isn’t exactly clear and some are worried they could mislead investors.
Others are worried this is just a way to peddle annuities.
A brief refresher: The Setting Every Community Up for Retirement Enhancement (or SECURE) Act is aimed at improving retirement planning and savings for every American.
It mandates several things; namely that there be an annual lifetime income statement provided to investors. This statement is to show your total plan balance as it would look with a single-life annuity, as well as a partner annuity.
The sponsor of your plan is supposed to be protected for making income projections if they follow the guidelines in the Act.
Still, the market is volatile and there are things people can do (or not do) that can impact their retirement savings.
Some plan sponsors already offer projections and similar statements and they can be a good thing when you are planning for retirement and how much to save.
The SECURE Act seeks to let investors know how much money they would get if they put savings in an annuity vs. withdrawing income.
Generally, you’d get more money with an annuity but that isn’t always the case, as there are many factors to consider like age at retirement, marital status and life expectancy.
Do you still have questions about the SECURE Act?
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