Optimism is high in the retirement industry for Congress to pass another major retirement security package this session, but the path forward is uncertain and there's no such thing as a sure thing in Washington.
Nonetheless, for proponents of retirement security legislation, the month of May is off to a promising start.
The leaders of the House Ways and Means Committee — Chairman Richard Neal, D-Mass., and Ranking Member Kevin Brady, R-Texas — reintroduced the Securing a Strong Retirement Act of 2021 on May 4 and held a markup May 5 during which members on both sides of the aisle commended the bill and approved it unanimously via voice vote. It now heads to the full House, though a vote has yet to be scheduled.
The bill, a version of which was originally introduced in October during the previous congressional session, includes dozens of provisions aimed at boosting retirement security. It builds on the Setting Every Community Up for Retirement En-hancement Act, known as the SECURE Act, which Congress passed and was signed into law in late 2019.
The Securing a Strong Retirement Act, also being referred to as SECURE Act 2.0, includes provisions that would require 401(k), 403(b) and SIMPLE plans to automatically enroll participants upon becoming eligible, allow 403(b) plans to participate in multiple employer plans and invest in collective investment trusts, create a national online database of lost retirement accounts to reduce the number of missing participants, and make changes to qualifying longevity annuity contracts, or QLACs, by removing the 25% cap — currently retirement savers can spend up to 25% of their account on a QLAC.
The bill's auto-enrollment provision initially enrolls participants at a floor of 3% of pay, and that contribution is then increased — unless the participant opts out — by 1 percentage point each year until it reaches 10%.
The bill would also raise the age at which individuals are required to begin withdrawing a percentage of their tax-deferred retirement plan to 75 from 72 over the next decade. Moreover, the bill would permit an employer to make matching contributions to a 401(k) plan, 403(b) plan or SIMPLE IRA — a Savings Incentive Match Plan for Employees used by small employers — on qualified student loan payments.
"The SECURE Act was the most significant retirement legislation to become law in over a decade," Mr. Neal said during the May 5 markup. "Let's not wait another decade to enact important provisions in the SECURE Act 2.0."