Let’s pick up from Part I and not let this S.E.C.U.R.E Act party end too soon!
- Use of 529 plans for apprenticeship and up to $10,000 of student loan debt repayment. Previously, 529 plan funds could not be used to pay off any student loan debt. Moving forward, each student (“beneficiary”) is allowed a one time $10,000 distribution (tax and penalty free) to pay down their student debt. This is a fair start to addressing the student loan debt issue, but for many that have the debt, there is no 529 to dip into in the first place. A more detailed summary can be found in this article provided by the wonderful resources at savingforcollege.com.
- New tax credits for small business establishing retirement plans and additional credit if they adopt “auto enroll.” A majority of families in the United States are grossly underfunded when it comes to retirement savings and any step to remove the fiction from them being able to save, is a step in the right direction. This credit should hopefully make setting up a retirement plan more affordable and automate the enrollment so more employees are saving into the plan, right out of the gate.
- Multiple Employer Plans (MEPs) have existed for a long time, but their rigid structure and shared liability among the participating companies has kept their adoption very low. Moving forward the rules are more flexible, which will hopefully allow employers to “team” up to bring a low-cost retirement plan to their respective employees.
- The medical expense deduction is back to 7.5% of Adjust Gross Income, down from 10%. This is another fair one, yet it only helps if you are in a position to be itemizing your federal income taxes. With the standard deduction for a married couple, filing joint, up to $24,800 for 2020, it is still difficult for many to take any advantage of itemizing.
Having this legislation in place is one thing, but knowing the proper way to navigate the ambiguous language and sea of gray areas is another. Over the coming months, strategies will emerge that will better help us implement and create actionable next steps. I will happily be your guide in understanding and taking advantage of these all these new opportunities. What’s even better, is I will work for beer, donuts and other interesting trades. 🙂