A bill outlining significant changes to private retirement plans is gaining momentum in Congress.
The Secure Act, which is intended to increase flexibility of 401(k) plans and improve access to the accounts — particularly for small businesses and their employees — was approved unanimously by the House Ways & Means Committee on April 4.
“Americans currently face a retirement income crisis, with too many people in danger of not having enough in retirement to maintain their standard of living and avoid sliding into poverty,” said Richard Neal, D-Mass., committee chairman, after the bill’s passing.
The bill, which appears to have bipartisan support, includes:
- Provisions aimed at encouraging small businesses to provide private retirement benefits to their workers.
- Allowing small businesses to offer 401(k)s and creates a new tax credit of up to $500 for organizations that provide plans with automatic enrollment.
- Enables long-term, part-time workers to become eligible for retirement benefits.
- Repeals the maximum age for IRA contributions and raises the age for required mandatory distributions from 70½ to 72.
- Expands the use of 529 plans, from only college-related expenses to include home schools and student loans.
Bob Melia, executive director of the Institutional Retirement Income Council, applauded the bill’s approval and said it aligns well with the Senate’s Retirement Enhancement and Savings Act of 2018.
“This bipartisan and bicameral support of retirement security bodes well for much needed legislation to advance America’s retirement security,” Melia said in a statement. “IRIC supports virtually all the provisions, but we are especially gratified to see the portability of guaranteed lifetime income; disclosure of lifetime income on participant statements; and fiduciary safe harbors for the selection of a guaranteed income product. These provisions will usher in an opportunity to provide more guaranteed income to the average American. This legislation eliminates the primary barriers to adoption thereby enabling sponsors to offer low-cost guaranteed income to their plan participants.”
The last time Congress passed major retirement legislation was the Pension Protection Act in 2006. That bill focused on underfunded accounts and reforms to the pension system.
About the Author
Brett Christie is a staff writer at WorldatWork.