The “Retirement Simplification and Clarity Act,” bipartisan legislation that would provide more flexibility and clearer guidance for Americans navigating retirement savings decisions, was introduced today on Capitol Hill by Reps. Jimmy Panetta (D-CA) and Darin LaHood (R-IL).
By addressing current barriers and complexities, the bill seeks to empower individuals with options and straightforward information for securing their financial futures.
“As Americans prepare for retirement, they deserve clear, concise guidance and flexible options to make the most of their hard-earned savings,” said Rep. Panetta in a press release. “This bipartisan legislation would provide older Americans with a more simplified process and flexibility to choose savings options that are right for them. By allowing individuals to make informed decisions about their retirement plans we can better ensure their financial security in the years ahead.”
Specifically, the Retirement Simplification and Clarity Act would implement recommendations from the Government Accountability Office (GAO) to reform the complex 402(f) Notice process. A 402(f) Notice is a document provided to individuals leaving an employer and seeking a distribution from their 401(k) plans.
The bill directs the IRS to redesign the notice using plain and concise language. The updated notice would include clear explanations of all distribution options, including rolling over savings into a new plan or retaining them in the current plan, ensuring individuals have the necessary information to make informed choices. Additionally, the bill would expand in-service rollover options by allowing individuals aged 50 and older to roll over their 401(k) savings into an annuity.
“I am proud to lead this bipartisan effort with Representative Panetta to help eliminate needless hurdles and reduce the confusion surrounding retirement,” said Rep. LaHood. “Hardworking Americans planning for retirement shouldn’t be burdened with complications that only create uncertainty about their financial future. Providing more flexibility and a better understanding of the process will help ensure Americans are more secure and better prepared for their retirement.”
The Retirement Simplification and Clarity Act is supported by financial planning experts and organizations advocating for retirement security.
“Many Americans are concerned that their savings will not last throughout retirement. Annuities allow retirement savers to replicate a traditional pension plan’s guaranteed lifetime income stream,” said David Chavern, President and CEO of the American Council of Life Insurers. “This important legislation will help Americans nearing retirement access annuity products they need to provide for a secure financial future.”
SEE ALSO:
• Auto Portability Adoption Surges with Portability Services Network Launch
• Outdated 401(k) Rollover Processes Challenge, Frustrate Retirement Savers
• Dressing Up Traditional Automatic Rollovers
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
