Bipartisan Support for Retirement PackageMay 4, 2022
Bipartisan Support for Retirement Package
Despite the political deadlock on many key pieces of legislation, there is strong bipartisan support to pass follow-up legislation to 2019’s Setting Every Community Up for Retirement Enhancement (SECURE) Act.
On April 25, Senate Finance Committee Chairman Ron Wyden (D-Ore.) said that his panel will mark up a so-called “SECURE 2.0” package in the near term, although he did not provide a specific timeline for committee action. Sen. Wyden indicated that tax writers are “sifting through” various proposals and that the schedule would be dictated by when there is consensus on which provisions should be included.
The panel currently has several bipartisan proposals to draw on in crafting a legislative package. Thus far in the 117th Congress, Wyden has released the Encouraging Americans to Save Act (S. 2452); taxwriters Ben Cardin (D-Md.), and Rob Portman (R-Ohio), have reintroduced their Retirement Security and Savings Act (S. 1770); and taxwriters Charles Grassley (R-Iowa), Maggie Hassan (D-N.H.), and James Lankford (R-Okla.), have introduced their Improving Access to Retirement Savings Act (S. 1703).
Across the Rotunda, the House approved its own SECURE 2.0 legislation—the Securing a Strong Retirement Act of 2022 (H.R. 2954), sponsored by Ways and Means Committee Chairman Richard Neal (D-Mass.), and ranking member Kevin Brady (R-Texas)—late last month by a vote of 414-5.
That measure, broadly speaking would:
- Allow plan participants nearing retirement to contribute more to their retirement accounts—by increasing the limits on catch-up contributions for certain employees, for example—and allow plan participants to take advantage of the benefits of tax-deferred earnings over a longer period of time by raising the age for beginning mandatory minimum distributions;
- Expand the universe of workers that participate in employer-sponsored retirement plans—for example, by requiring employers offering certain types of retirement plans to automatically enroll their employees in those plans (subject to an employee opt-out), allowing employers to treat student loan payments made by their employees as elective deferrals for purposes of determining retirement plan matching contributions, reducing the service requirements for part-time employees to participate in an employer plan, and providing a tax credit for employers who reduce service requirements and accelerate vesting schedules for employees who are military spouses;
- Modify certain retirement plan design rules to ease administrative burdens for plan sponsors—particularly small businesses—and provide additional flexibility and other relief for plan participants;
- Remove barriers to offering certain types of annuity products within a defined contribution plan;
- Provide greater flexibility for employers offering employee stock ownership plans;
- Simplify the current-law saver’s credit (available to low- and moderate-income individuals who make contributions to a retirement account); and
- Make certain technical amendments to 2019’s SECURE Act.
These and other proposed retirement plan enhancements and savings incentives—a number of which align with provisions in the various Finance Committee proposals—would reduce federal receipts by nearly $35.8 billion over 10 years, according to a revenue estimate released by the nonpartisan Joint Committee on Taxation on March 28. But that amount would be more than offset by nearly $35.9 billion in pay-fors, most of which would expand “Roth” treatment of certain retirement accounts and certain retirement account contributions.