Senate Finance Committee floats SECURE 2.0 companion

The likely final piece of Congress' SECURE 2.0 package will be considered in the Senate Finance Committee on Wednesday.

Sen. Ron Wyden, D-Ore., chairman of the Finance Committee, released a summary on June 17 of the bipartisan Enhancing American Retirement Now Act, or EARN Act. The move comes shortly after the Senate Health, Education, Labor and Pensions Committee advanced its own SECURE 2.0 companion bill out of committee on June 14. The two committee bills will form Senate's SECURE 2.0 package; the House passed its SECURE 2.0 bill in March in 414-5 vote.

While bill text is not yet available, the EARN Act summary notes a slew of provisions included in previously introduced bills, including allowing 403(b) plans to participate in multiple employer plans; reducing the requirement for part-time workers to participate in an employer's retirement savings plan to two years of service from three years; permitting an employer to make matching contributions to a 401(k) plan and other tax-preferred retirement plans on qualified student loan payments; and raising the age at which individuals are required to begin withdrawing a percentage of their tax-deferred retirement plan to 75 from 72.

The EARN Act would also permit employers that do not sponsor a retirement plan to offer a "starter" 401(k); offers employers with 100 or fewer employees a $500 credit for up to three years if they adopts a reenrollment feature in a retirement plan that default enrolls employees into elective deferral contributions at least once every three years; and makes changes to qualified longevity annuity contracts, or QLACs, by removing the 25% cap — currently retirement savers can spend up to 25% of their account on a QLAC — and raising the contribution limit to $200,000 from $135,000.

"Americans deserve dignified retirements after decades of hard work, and our bill is an important step forward," Mr. Wyden said in a statement. "In particular, I'm proud that we are making significant progress for millions of low- and middle-income workers, who are far less likely to have adequate retirement savings."

The EARN Act will likely be advanced out of committee Wednesday and then Senate leaders will combine it with the HELP Committee's Retirement Improvement and Savings Enhancement to Supplement Healthy Investments for the Nest Egg Act, or RISE & SHINE Act. If the Senate were to pass that combined bill, any differences with the House's SECURE 2.0 bill would have to be worked out before final passage and a completed bill could be sent to President Joe Biden to sign.