The House Ways and Means Committee on Wednesday easily approved far-reaching legislation that modifies retirement accounts, but when Congress will take it up is unclear.
The bill, the “Securing a Strong Retirement Act of 2021,” passed yesterday with unanimous support from a committee that routinely is plagued by partisanship. The committee’s leaders, Chairman Richard Neal (D-Mass.) and Ranking Member Kevin Brady (R-Texas), urged Congress to act quickly and pass the legislation so it can soon be enacted.
“We hope to see this measure move through Congress and be signed into law in short order,” they said in a joint statement.
But quick action on the bill has been thrown into question. House passage may not occur until later this summer as some lawmakers would like to amend the bill before it is subject to a floor vote. Also, the legislation is not a priority for the Senate Finance Committee, which has jurisdiction over this bill in the upper chamber.
That lack of urgency could mean a Senate vote on the bill may not occur until the Fall. Also, if the chamber approves a modified version to what passed the House, the bill must return to the House for approval, which can be a time-consuming process.
Still, the legislation is expected to eventually pass Congress. It is a follow-up to the Secure Act, which passed Congress in 2019 with strong bipartisan support. In fact, the “Securing a Strong Retirement Act of 2021” has a nickname: Secure Act 2.0. Its provisions include:
- Expanding automatic enrollment in retirement plans beyond what is currently allowed;
- Increasing the required minimum distribution age to 75;
- Allowing workers to receive an employer match on their retirement plan while they pay down student loans instead of investing in their retirement account;
- Penalty-free withdrawals from retirement plans for individuals in case of domestic abuse;
- Increasing the limit on catch-up contributions for individuals age 62, 63, or 64;
- Removing required minimum distribution barriers for life annuities issued in connection with certain retirement plans;
- Creating a nonrefundable tax credit for certain small employers whose employee is a military spouse and participates in a qualified defined contribution plan of the employer;
- Prohibiting qualified plans from failing if there is no payment or an over payment from participants (or others);
- Reduces from three years to two years the service requirement for long-term, part-time workers to participate in their employer’s retirement account.
- Permitting SEPs and a SIMPLE IRAs to be designated as Roth IRAs.
- Allowing certain catch-up and employer matching contributions to be designated as Roth contributions.
- Allowing certain small businesses to deduct 100% of start up costs for retirement plans in the first year of creating the plan.
The legislative text can be found here.
The Joint Committee on Taxation description of the bill can be found here.
The Joint Committee on Taxation cost estimate of the bill can be found here.