The House Ways and Means Committee approved a new retirement reform package Tuesday, clearing the way for a yet-to-be scheduled full House vote.
The package, the Setting Every Community up for Retirement Enhancement Act of 2019, referred to as the SECURE Act, was introduced March 29 by a bipartisan group of committee members, including its Chairman Richard Neal, D-Mass., and Kevin Brady, R-Texas, the committee's ranking member. It passed the committee via unanimous voice vote at a markup Tuesday.
The bill includes the core provisions of the Retirement Enhancement Savings Act, such as making it easier for smaller employers to join open multiple-employer plans, easing non-discrimination rules for frozen defined benefit plans and adding a safe harbor for selecting lifetime income providers in defined contribution plans.
Late Monday, Senate Finance Committee Chairman Chuck Grassley, R-Iowa, and Sen. Ron Wyden, D-Ore., introduced a new version of RESA that is largely the same as the bill introduced last year. Like the SECURE Act, RESA would encourage employees to increase their retirement savings annually through automatic increases in contributions to 401(k) plans and require employers to provide estimates of how much an employee's account would provide during retirement if it were invested in an annuity.
That last provision, known as the Lifetime Income Disclosure Act, has drawn criticism from plan sponsor groups. Last week, the ERISA Industry Committee sent a letter to Mr. Neal urging him to modify LIDA by providing more flexibility to plan sponsors on how they communicate to plan participants on the importance of saving for a lifetime of needs.
"The rigidity of the mandated disclosure would create needless confusion, additional costs and stifle innovation," said Aliya Robinson, ERIC's senior vice president, retirement and compensation policy, in a statement.
Groups like the American Council of Life Insurers favor LIDA. "Taken together, RESA and the SECURE Act represent the kind of leadership necessary to address Americans' retirement security concerns," said Susan Neely, ACLI president and CEO, in a statement. "We urge Congress to act quickly on these important measures."
The House committee made no changes to the LIDA provision on Tuesday.
The SECURE Act would also increase the auto-enrollment safe harbor cap to 15% from 10%. Moreover, the bill includes a provision that would require employers to allow long-term, part-time workers to participate in workplace 401(k) plans.
One of the differences between the House and Senate bills is when participants will be required to begin taking distributions from their retirement plans. The House bill increases the required minimum distribution age to 72 from 70 ½, while the Senate bill makes no change.
At the markup hearing Tuesday, House Ways and Means Committee members highlighted their bipartisan support for the SECURE Act, including Mr. Neal who reiterated his priority to help "American workers of all ages prepare for a financially secure retirement."
Mr. Brady followed by saying the time is right to move forward on this issue. "I'm optimistic we will send this legislation to the president's desk this year," he said.
Rep. Ron Kind, D-Wis., who also co-sponsored the SECURE Act along with Rep. Mike Kelly, R-Pa., said he was "happy to report that based on our contact with both Sens. Grassley and Wyden, they're anxious to pick up this legislation and move it forthwith in the Senate as soon as we can send it over there."
Christopher Spence, senior director of federal government relations for TIAA- CREF in Washington, said the movement in the House and Senate on this issue is a positive sign and was especially encouraged by the bipartisan show of support at the markup Tuesday.
"Today is really a positive step for retirement security," he said in a phone interview. "Hopefully we can build on this momentum and get some things moving forward before the end of the year, if not sooner."
