As the Securing a Strong Retirement Act of 2021 heads to markup on Capitol Hill this Wednesday, a new study shows the vast majority of financial professionals strongly support the bill, also known as SECURE Act 2.0.
House Ways and Means Committee Chairman Richard Neal (D-MA) has scheduled a markup session at 11 a.m. EDT on May 5 for the comprehensive retirement bill that would build on the SECURE Act, which passed at the end of 2019.
A markup session is where a committee may consider amendments to legislation and then will typically vote on a final version for floor consideration. Most expect the committee will move the bill, which enjoys bipartisan support, forward following the markup session.
With the bill’s approval likely around the corner, Nationwide Retirement Institute surveyed 500 advisors and financial professionals about how its proposed provisions will impact their clients.
The survey released today found the vast majority (93%) of financial pros agree that the legislation would make it easier for their clients to save for retirement, and many believe it will help course-correct the pandemic’s impact on Americans’ retirement planning.
This overwhelming support suggests the proposed legislation would be well-timed, with 77% of financial professionals agreeing that COVID-19 has led their clients to slow or stop contributions toward their retirement savings, and another 50% reporting that their clients’ financial security has been negatively impacted by COVID-19.
Financial professionals indicated that when the SECURE Act of 2019 passed, their clients updated their retirement plans (50%), were able to save more in general (48%), increased their retirement account contributions (48%), and increased their emergency savings (47%). Today, they agree that many of the proposed components of SECURE Act 2.0 would make it even easier for their clients to save for retirement and get back on track toward their goals.
Notably, 93% believe allowing employers to match contributions under a 401k plan, 403b plan or Simple IRA while employees make student loan payments will increase their clients’ financial security. Eight in 10 (81%) agree increasing the catch-up contribution limit for those 60+ to $10,000 for retirement plans and $5,000 for simple IRAs will do the same.
Similarly, 79% support increasing the Required Minimum Distribution (RMD) age from 72 to 75 years old and 78% agree adding ETFs as an investment option to variable annuities would also be financially beneficial for clients.
Additionally, 93% of financial professionals are in favor of the proposed Saver’s Credit changes, which would simplify and increase tax incentives for low- and middle-income individuals saving for retirement, and 93% say it will promote healthy financial practices.
“The first SECURE Act legislation that passed in 2019 was a tremendous step forward in removing some of the obstacles people experience when saving for retirement,” said John Carter, president and COO of Nationwide Financial. “SECURE Act 2.0 is a significant next step that will help many Americans take control of their financial futures. It’s great to see that advisors and financial professionals helping Americans prepare for retirement also see significant opportunities for their clients in the proposed legislation. We’re encouraged by the bipartisan support taking shape on Capitol Hill.”
In terms of additional opportunities to help clients save for retirement, 94% of financial professionals agree that adding an emergency savings provision to the proposed legislation that would permit employees to withdraw or use limited retirement plan contributions for critical short-term financial needs without an early distribution tax penalty would help improve Americans’ financial security, and 91% agree that it should be included as part of the SECURE Act 2.0 legislation.
“We saw first-hand how many Americans turned to their retirement savings to bridge the gap when faced with a COVID-19-related emergency,” said Eric Stevenson, president of Nationwide Retirement Solutions. “By building an emergency savings component into a retirement plan, participants could tap funds without incurring excessive tax consequences or pulling their assets out at market lows. It’s our hope that lawmakers consider an emergency savings provision for SECURE Act 2.0 or in a separate piece of legislation to address lessons learned during the COVID crisis.”
Stevenson testified before a U.S. Senate subcommittee in support of the proposed legislation back in December.