Retirement security for American workers made a giant legislative leap last week. The House Ways and Means Committee passed the Securing a Strong Retirement Act, also known as SECURE 2.0, to the House floor. SECURE 2.0 furthers initial progress made by the landmark Setting Every Community Up for Retirement Enhancement (SECURE) Act, which was passed in late 2019 before the Covid-19 pandemic spread worldwide.
Like its predecessor, SECURE 2.0 is designed to make retirement plan coverage at work more widely accessible for more Americans, enabling more employees and retirees to save. SECURE 2.0 also serves to clarify and simplify existing retirement plan rules. Like the SECURE Act, SECURE 2.0 has bipartisan support in the interest of overall retirement security.
The new bill would increase the required minimum distribution age for retirement plans from 72 to 75 over 10 years. Other provisions included in the proposed legislation would:
- Expand automatic enrollment and auto-escalation in workplace retirement plans
- Raise catch-up contribution limits for people ages 62-64, making it easier for those who have not saved enough to boost their savings as they close in on retirement
- Increase tax incentives for small businesses to set up workplace retirement plans, which may encourage more employers to offer this key benefit
- Allow employers to match an employee’s student loan payments with a contribution to their retirement plan account
It paves-the-way for more widespread use of lifetime income products like annuities in retirement plans.
Lawmakers are enthusiastic about the possibilities of SECURE 2.0. “The Securing a Strong Retirement Act makes important changes that will have real-world, positive implications for retirement savers,” said Susan Neely. Ms. Neely is president and CEO of the American Council of Life Insurers who penned an article published on Insurancenewsnet (linked above). Insurancenewsnet touts itself as the insurance industry’s number one news source. “Incentives for small businesses to offer retirement plans, support for student loan borrowers with their repayment, and enhancements that guarantee those who are either close to or in retirement do not outlive their savings, are all key components.”
SECURE 2.0 will go to the House, then the Senate, for a vote on retirement security. It is not clear when the House will vote on the bill. Plan sponsors should keep a close eye on Capitol Hill for developments, and of course, we’ll keep you apprised here on 401kTV as additional details become available.
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