The SECURE Act, CARES Act, and now the SAVERS Act?
The top Republican on the House Financial Services Committee introduced a bill last week that would temporarily raise contribution limits on 401ks and other “tax-preferred retirement savings plans and individual retirement accounts.”
The limits would be applied to 2019 or 2020.
Representative Patrick McHenry, R-NC, introduced the new legislation to help Americans whose retirement savings have been harmed by the economic impact of coronavirus (COVID-19).
H.R. 6562, the Securing Additional Value for Every Retirement Saver (SAVERS) Act, will allow all savers “the opportunity to prepare for a financially secure retirement and encourage investment in companies that need capital,” according to the Congressman.
“Every American is feeling the economic impact of COVID-19,” McHenry said in a statement. “We need to give savers the opportunity to shore up the savings they have worked so hard to grow. The SAVERS Act is a commonsense and temporary fix to put these everyday investors back on the right track toward their retirement goal, tax-free. Whether retirement is right around the corner or several years down the road, these funds are critical for the financial wellbeing of millions of Americans and thousands of struggling businesses through our capital markets.”
Key provisions of the SAVERS Act
- The SAVERS Act temporarily raises contribution limits for tax-preferred defined contribution plans, including 401(k)s, 457 plans, and Individual Retirement Accounts (IRAs), among others.
- Typically, contributions are capped at the saver’s annual compensation or a fixed dollar amount for all participants, whichever is less. For example, the fixed dollar amount contribution limit for 401(k)s in 2020 is $19,500.
- The SAVERS Act triples maximum contribution limitations for 2020 and, for savers limited by their annual income, allows such savers to contribute up to 100% of their annual compensation from 2019 or 2020, whichever is higher.
SEE FULL TEXT OF THE BILL HERE: SAVERS Act