Ted Cruz’s AMORE Act Aims to Help 401(k) Participants Catch Up

Ted Cruz AMORE Act
Ted Cruz and three of his Republican Senate colleagues introduced a bill to help 401k participants with catch-up contributions.

Legislation was introduced last week by a group of Republican senators that would allow people to make catch-up contributions to their 401(k) and similar retirement accounts in 2021 and 2022 if they’re unable to make full contributions in 2020.

Senators Ted Cruz (R-TX), Thom Tillis (R-NC), David Perdue (R-GA), and Kelly Loeffler (R-GA) introduced the “Addressing Missed-savings Opportunities for Retirement due to an Epidemic Act” (AMORE Act), designed to help individuals facing financial challenges as a result of COVID-19.

Specifically, the AMORE Act would allow individuals to compare their actual contributions to retirement accounts such as 401(k) plans, 403(b) plans, and IRAs made in 2020 to the annual contribution limits on these various retirement accounts, and permit them to make the catch-up contributions in 2021 and 2022 equal to the difference between their actual contributions and current federal limits on these accounts.

“The unprecedented economic challenges we’re facing have threatened the livelihoods and life savings of millions of hardworking men and women across the country. As we work to get our economy back on its feet and help Americans safely return work, we must also help ensure this crisis does not result in a permanent detriment to Americans’ retirement savings,” Cruz said in a statement. “That’s why I’m introducing the AMORE Act. By allowing catch-up contributions, this legislation will give people the flexibility they need to continue saving for the future.”

Perdue noted that with millions of Americans unemployed and many more faced with reduced hours, both employers and employees have scaled back retirement contributions. “The AMORE Act will allow hardworking Americans to catch up on their retirement contributions as the economy recovers. This critical bill helps preserve millions of Americans’ retirement plans while removing one less worry in these unprecedented times,” Perdue said.

Americans for Tax Reform President Grover Norquist endorsed the AMORE Act, saying in a statement that there are an estimated 58 million Americans with a 401(k) and 46 million Americans with an IRA. “Due to the economic hardships caused by COVID-19, many of these Americans may not have the cash to properly utilize their savings accounts. Senator Cruz’s legislation wisely recognizes this by allowing Americans to make a catch-up contribution in 2021 or 2022 for any unused 2020 contribution.”

[Editor’s Note: This story has been updated to clarify that the Insured Retirement Institute has not yet taken a position on the bill]

The Insured Retirement Institute sent a letter to the bill’s sponsors Monday calling for the AMORE Act to be enhanced with some additional provisions it recommended earlier this year in its five-point plan to help mitigate the financial consequences the COVID-19 pandemic has caused to the nation’s retirement security.

In the letter, IRI cited statistics from a recent Transamerica survey showing one in four workers say their confidence in their ability to retire comfortably has declined due to the pandemic and more than half of workers say they have experienced an impact to their employment situation as a result of the pandemic, including 30% who have had hours reduced, 17% have had a reduction in salary, 16% were laid off, 11% were furloughed and 5% percent entered retirement early.

“We are encouraged by the bill sponsors’ commitment to provide assistance to workers and retirees who have been hurt by the economic fallout caused by the pandemic,” said Paul Richman, IRI Chief Government and Political Affairs Officer. “We have asked the sponsors to consider amending the AMORE Act to include all of the elements of IRI’s five-point plan to help retirement savers recover from the pandemic’s recession.”

The IRI plan is focused on two key objectives. First, it is designed to help retirement savers save more today by keeping their tax-deferred retirement savings longer. Second, it offers ways to strengthen retirement security for tomorrow by creating opportunities to save more when America returns to work.

Specifically, IRI’s plan calls for:

  • Increase the Required Minimum Distribution age to 75
  • Eliminate barriers to allow greater use of lifetime income products
  • Allow catch-up retirement contributions for those affected by COVID-19
  • Expand retirement saving opportunities for non-profit organization employees
  • Clarify start-up tax credit to incentivize small businesses to join MEPs/PEPs

“IRI remains eager to get to work on these initiatives, and we appreciate and thank you for the opportunity to provide suggestions to you for your consideration to broaden the AMORE Act,” Richman said in concluding the letter. “It is our hope you will find our recommendations useful, and we welcome the opportunity to work with you and Congress in the future as you consider legislative avenues to help retirement savers recover and avoid facing a retirement savings crisis in the aftermath of this terrible pandemic.”

The full text of the proposed AMORE Act legislation can be read here.

Brian Anderson Editor
Editor-in-Chief at  | banderson@401kspecialist.com | + posts

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.

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