Closing in on the second week of December, SECURE 2.0 advocates are sitting at the edge of their seats as they await news of the retirement reform bill’s passage.
Industry experts initially believed the bill would be approved swiftly during the lame duck session—the period following midterm elections and January 3, when a new Congress would start the year—but are now betting on it being passed as an add-on to a must-pass government funding bill. Lawmakers would need to pass the funding bill for the next fiscal year by next Friday for SECURE 2.0 to be attached, and passed, with it.
Lance Schoening, director of policy at Principal, believes the passage of new retirement reform legislation relies upon whether Congress can enact the deal for government funding. “It all comes down to whether Congress could strike this long-term deal,” he said. “That really is the sole vehicle that SECURE 2.0 has available to it.”
If the bill isn’t passed by Friday and Congress instead pushes for a continuing resolution to keep funding at current levels for 2023, it’s possible legislators will take extra time to negotiate and pass SECURE 2.0, thus potentially creating a Christmas miracle. “There’s nothing like the smell of jet fumes and holiday cooking to encourage Congress to strike a deal, so all of these things could come down to our holiday time,” added Schoening. “I suspect that what we’re going to see here is the negotiators will want some additional time and they’ll pass a short-term continuing resolution to push that deadline a little bit closer to the Christmas holiday recess.”
If Christmas comes and goes and we still don’t see any passage, Schoening projects negotiators to go over the New Year holiday and potentially approve the bill by January 2, a day before new legislators take over.
And if SECURE 2.0 still isn’t passed by then, then it’s likely the retirement industry would see another year-long to multi-year effort for SECURE 2.0 to be passed under an entirely new Congress. With new committees and chambers, it’s unlikely the legislation would be passed promptly. “With the House turning over and committees changing their makeup, we’re unsure of whether SECURE 2.0 would get the traction that it needed to move quickly,” Schoening said. “I don’t think anyone believes that it would move quickly in that new environment, it would probably take the full year or more for the new legislation to be introduced and those right channels.”
Democrats could take matter into their own hands
Schoening noted a potential curveball in the SECURE 2.0 saga, adding that the current democratically controlled House of Representatives could potentially release its own appropriations bill and tie SECURE 2.0 to it, to which Senate Republicans would then react to. It’s uncertain whether the Senate would pass such a bill however, especially if the legislation is not bipartisan. “I don’t suspect that what we’ll see from the House won’t be a bipartisan product, at least from the eyes of the Republicans,” Schoening said.
Industry experts eagerly await passage
As the collective retirement industry readily waits for SECURE 2.0 to finally pass, industry leaders have urgently called on Congress push the bill.
In November, a group of 60 organizations and companies sent a letter to Senate Majority Leader Chuck Schumer (D-NY), House Speaker Nancy Pelosi (D-CA), Senate Minority Leader Mitch McConnell (R-KY) and House Minority Leader Kevin McCarthy (R-CA), pressing legislators to “take quick action and pass a compilation of retirement provisions known as SECURE 2.0.”
TIAA would also later issue a following statement encourage Congress to “seize the opportunity for bipartisanship and unity” by passing SECURE 2.0.
Other industry organizations have called on Congress to prioritize certain provisions in the legislation. The Bipartisan Policy Center sent a letter addressed to four Congressional leaders asking them to specifically prioritize the emergency savings provisions, and the National Association of Government Defined Contribution Administrators (NAGDCA) recently urged Congress to retain a SECURE 2.0 provision that allows the use of collective investment trusts (CITs) by 403(b) plans.
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