House OKs Retirement BillApril 6, 2022
On March 29, the House voted 414-5 to approve the Securing a Strong Retirement Act of 2022 (H.R. 2954), bipartisan retirement security legislation that would make it easier for businesses to offer tax-qualified retirement savings plans to their employees and for individuals to participate in retirement plans and grow their tax-preferred savings. This legislation builds on bipartisan retirement security legislation, known as the SECURE Act, which was signed into law at the end of 2019.
Thie bill would, among other things:
- 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 taking 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 (though employees could 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 administration 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; and
- Make certain technical amendments to 2019’s SECURE Act.
The bill also includes a provision that would simplify the current saver’s credit (available to low- and moderate-income individuals who make contributions to a retirement account) by scrapping the two-tiered rate structure and replacing it with a single credit rate of 50 percent. The credit would be available subject to an income-based phase-out. It also would provide greater flexibility for employers offering employee stock ownership plans
The measure now heads to the Senate, where it is expected to get a favorable reception, given that lawmakers on both sides of the aisle have expressed support for expanding the SECURE Act. However, Senate tax writers have retirement security proposals of their own that they likely will want to incorporate into any new legislation that Congress eventually sends to the White House.