Expand auto-enrollment, provide incentives for small businesses to offer plans, increase the RMD age to 75, allow for bigger catch-up provisions—there’s a lot in so-called SECURE Act 2.0.
On Tuesday, Ways and Means Committee Chairman Richard Neal, D-Mass., and Ranking Member Kevin Brady, R-Texas, introduced the Securing a Strong Retirement Act of 2020, bipartisan legislation they say will “help a greater number of Americans successfully save for a secure retirement.”
The bill builds on the SECURE Act passed late last year to further improve workers’ long-term financial wellbeing.
“COVID-19 has only exacerbated our nation’s existing retirement crisis, further compromising Americans’ long-term financial security,” Neal said in a statement. “In addition to meeting workers’ and families’ most pressing, immediate needs, we must also take steps to ensure their well-being further down the road. With the Securing a Strong Retirement Act, Ranking Member Brady and I build on the landmark provisions in the SECURE Act and enable more workers to begin saving earlier – and saving more – for their futures. This bill will help Americans approach old age with the confidence and dignity they deserve after decades of hard work and sacrifice.”
“Ensuring Americans have the resources they need for a prosperous retirement is a bipartisan priority – and I’m glad that Chairman Neal and I were able to come together again to build on our work from the SECURE Act,” Rep. Brady said. “Our legislation will make it easier for folks to save, protect Americans’ retirement accounts, and give workers more peace of mind as they plan for the future.”
Key points of the act
- Promote savings earlier for retirement by enrolling employees automatically in their company’s 401(k) plan, when a new plan is created.
- Create a new financial incentive for small businesses to offer retirement plans.
- Increase and modernize the existing federal tax credit for contributions to a retirement plan or IRA (the Saver’s Credit).
- Expand retirement savings options for non-profit employees by allowing groups of non-profits to join together to offer retirement plans to their employees.
- Offer individuals 60 and older more flexibility to set aside savings as they approach retirement.
- Allow individuals to save for retirement longer by increasing the required minimum distribution age to 75.
Industry reaction
“Referred to by folks here in DC as SECURE 2.0 there are some provisions that have been pushed by the American Retirement Association, including expanding the current law SAVERS Credit, increasing the catch-up contribution limit for older workers, allowing for plans to make 401(k) matching contributions for student loan payments, and allowing 403(b) PEPs,” Brian Graff, CEO of the American retirement Association, wrote on LinkedIn. “However, there are some provisions that raise some concerns, including a late addition to the bill at the behest of AARP that would require at least one annual benefit statement be delivered in paper form notwithstanding the recent e-disclosure regulation.”
“Chairman Neal and Ranking Member Brady are extraordinary champions for workers saving for retirement,” American Council of Life Insurers President and CEO Susan Neely, said upon news of the act. “Their proposal reflects many important bipartisan priorities, and we look forward to continuing to work with them to strengthen Americans’ financial footing.”
“TIAA applauds Chairman Neal and Congressman Brady for today’s introduction of the Securing a Strong Retirement Act of 2020,” Chris Spence, managing director of federal government relations at TIAA, added. “This bipartisan legislation will build on the important retirement reforms set in motion by [the] enactment of the SECURE Act, which passed last year.”
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
