The House on March 29th passed far-reaching retirement legislation that will now travel to the Senate for approval, where passage is likely.
The legislation combines two bills: the “Securing a Strong Retirement (Secure 2.0) Act of 2021,” which passed the House Ways and Means Committee in May of 2021, and the “Retirement Improvement and Savings Enhancement (RISE) Act,” which passed the House Labor and Education Committee in November of 2021. These committees share some jurisdiction over retirement policy issues.
The new bill is called “Securing A Strong Retirement Act of 2022.”
The following provisions are included in the “Securing A Strong Retirement Act of 2022”:
- Expanding automatic enrollment in retirement plans beyond what is currently allowed;
- Modifications to the Savers Credit;
- Increasing the required minimum distribution age to 75;
- Allowing workers to use payments made to student loans, rather than making contributions to a retirement plan, to receiving an employer matching amount;
- 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;
- Reducing 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 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.
- Establish an online, searchable “Retirement Lost and Found” database at the Department of Labor to help workers locate their hard-earned retirement savings as they move from job to job;
- Allow 403(b) retirement plans to participate in multiple employer plans and pooled employer plans;
- Clarify rules regarding the recovery of inadvertent overpayments to retirees, minimizing hardships;
- Enable employers to provide small financial incentives to incentivize workers’ participation in retirement plans;
- Simplify and clarify reporting and disclosure requirements related to retirement plans.
The legislation now goes to the Senate where it will be the subject of congressional hearings.
The Senate Health, Education, Labor and Pensions (HELP) Committee held a hearing on the legislation on March 29th. The hearing focused largely on the lack of retirement funds for women and poorer workers.
The Senate Finance Committee could also hold a hearing on the legislation but has yet to announce one.
If either of these committees make changes to the House-passed bill and the Senate approves those changes, those modifications must be approved by the House before the legislation can be signed into law. This could be a time-consuming process with the prospect that the Senate version never gets a House vote.
If the Senate committees do not amend the House-passed legislation and it is approved by the upper chamber, it can be signed into law.
So far, the White House has not issued a “Statement of Administration Policy,” or SAP, on whether the president supports or opposes the legislation. However, given that the bill has strong bipartisan support in both chambers, it is likely that President Biden supports the legislation and would sign it into law if given the opportunity to do so.