A number of retirement provisions are included in the sprawling 1,815-page HEROES Act, released by House Democrats on Tuesday, including further relief from required minimum distributions (RMDs) and aid for struggling multiemployer pension plans.
Speaker Nancy Pelosi and House Democrats are planning to move ahead with a Friday vote on the new $3 trillion package to respond to the coronavirus crisis, despite protests from progressives that the bill doesn’t go far enough and assurances from President Trump and the Republican-controlled Senate that they are in no hurry to consider another massive stimulus package.
In the Heroes Act’s 90-page summary, Democrat proponents led by Pelosi call it “A Bold Response to the Coronavirus Pandemic and the Economic Collapse.” The bill was drafted largely without rank-and-file input from House Democrats, and no input from Republicans or the White House.
The bill would provide for a second round of direct payments to most Americans of up to $1,200 per individual and $2,400 per married couple, plus an additional $1,200 per dependent, up to three dependents. The bill also includes a number of other tax-related provisions, largely focused on providing relief to individuals.
Pelosi and her committee chairs had initially assembled $4 trillion worth of policy proposals, but were forced to winnow it down about 25% during final drafting with the realization that they can’t tackle everything they want to in the bill, and hinting that more legislation should follow, including a much-rumored infrastructure bill.
Republicans have been dismissing the new House stimulus package since discussion about it began, calling it a “Democratic wish list” that would go nowhere in the Senate.
While demand for another stimulus package could intensify in coming weeks, most experts say it is highly unlikely Congress passes another relief package before mid-June as Republicans have repeatedly said there hasn’t been enough time since the $2 trillion CARES Act passed to determine whether new legislation is needed or necessary.
Heroes Act would expand RMD relief
The Heroes Act’s retirement provisions make up “Division D” of bill, prepared by the Democratic staff of the House Committee on Ways and Means, which includes committee chairman Richard Neal (D-MA), long a champion of legislative retirement reform efforts.
“Families are feeling the pain of a terrible one-two punch—a national public health emergency coupled with a historic economic downturn,” Neal said in a news release. “The gravity of our new reality demands substantial solutions, and that’s what Ways and Means Democrats offer in this latest response package.”
In “Title III – Other Retirement Related Provisions,” Sec. 301 would waive required minimum distributions from defined contribution plans and IRAs for 2019. From the summary’s text:
“Due to the market downturn resulting from the COVID-19 pandemic, the balances in these accounts have sharply decreased—in many instances, the market has reduced taxpayers’ accounts more than what their RMD would have been. Therefore, the recently enacted CARES Act waived RMDs for 2020, allowing individuals to keep funds in their retirement plans. This provision expands this relief further by providing that 2019 RMDs would be waived for defined contribution plans and IRAs.”
The Heroes Act would also waive the 60-Day Rule in case of Rollover of Otherwise Required Minimum Distributions in 2019 and 2020. This provision further expands the 2020 RMD relief in the CARES Act by providing that:
- The RMDs made for 2019 would be permitted to be rolled back to a plan or IRA without regard to the 60-day requirement if the rollover is made by November 30, 2020.
- RMDs made for 2020 would be permitted to be rolled back to a plan or IRA without regard to the 60-day requirement if the rollover is made by November 30, 2020.
Relief for Multiemployer Pension Plans
The Heroes Act’s retirement provisions also includes relief for troubled multiemployer pension plans. The “Emergency Pension Plan Relief Act of 2020” (EPPRA) says “the economic catastrophe resulting from COVID-19 has exacerbated the multiemployer pension crisis and threatened the hard-earned pensions of even more workers and retirees. This threatens to bankrupt the Pension Benefit Guaranty Corporation (“PBGC”), impose damaging liabilities on thousands of businesses, and devastate communities across the country.”
About 10 million Americans participate in multiemployer pension plans and about 1.3 million of them are in plans that are quickly running out of money.
EPPRA creates a special partition program that would expand PBGC’s existing authority, increase the number of eligible plans, and simplify the application process—allowing more troubled plans to obtain relief. “Just like the bipartisan Butch Lewis Act (H.R. 397), eligible plans would include: plans in critical and declining status, plans with significant underfunding with more retirees than active workers, plans that have suspended benefits, and certain plans that have already become insolvent,” the summary states.
Under the special partition program, a plan would receive enough financial assistance to keep it solvent and well-funded for thirty years—with no cuts to the earned benefits of participants and beneficiaries. Plans that previously cut benefits would have to restore them to the retirees who earned them.
The full summary of the bill’s “Division D: Retirement Provisions” can be found on pages 22-26 of the 90-page summary of the Heroes Act.
The full text of the bill is available here.
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.
