Concern and criticism are intensifying over a sweeping retirement security package that overwhelmingly passed in the House and has stalled in the Senate, but proponents are still hopeful it will move this year.
Passage of the Setting Every Community up for Retirement Enhancement Act of 2019, referred to as the SECURE Act, looked like a foregone conclusion after the House's 417-3 vote on May 23. Senate leaders fast-tracked the bill in an attempt to move it via unanimous consent. However, three Republican senators — Mike Lee of Utah, Ted Cruz of Texas and Pat Toomey of Pennsylvania — each put holds on the bill, blocking its passage via unanimous consent, sources said.
"I'm disappointed that it's gotten such strong, bipartisan support and yet still lingers out there in a sort of legislative limbo," said Christopher Spence, senior director of federal government relations for TIAA-CREF in Washington.
And that delay has given critics of the bill time to make their concerns heard. "It's easier to kill a bill than pass a bill, and the longer that any bill sits out there, the more critics come out of the woodwork," said Melissa Kahn, Washington-based managing director of retirement policy for State Street Global Advisors' defined contribution team.
A provision that would reshape the way individual retirement accounts are distributed to non-spouse beneficiaries upon the death of the account holder is drawing the most complaints of late. Currently, those beneficiaries can take distributions throughout their lifetimes, but the SECURE Act would cut the distribution timeline to 10 years.
The provision is known as a pay-for, meaning it would likely bring in increased tax revenue to help offset costs of other provisions, like raising the age for required minimum IRA distributions to 72 from 70½.
Some in the investment adviser community, like Peter T. Palion, founder of Master Plan Advisory Inc., an East Meadow, N.Y.-based financial planning firm, said it's unfair for lawmakers to collect increased tax revenue on the backs of clients who have planned to leave their children an inheritance through an IRA.
"The aim of the law is to help people save for retirement, right?" Mr. Palion said. "Why would the government favor a person who has to save money from scratch as opposed to one who inherits it? The government shouldn't care how its people get money for retirement."