The retirement industry received some welcome news late last year when lawmakers passed another major bipartisan retirement security package, but industry sources aren't expecting 2023 to yield many more legislative victories when it comes to retirement issues.
"Everything that they could find where there was bipartisan agreement made it into this bill," said Michael P. Kreps, Washington-based principal and co-chairman of the retirement services practice at Groom Law Group, about SECURE 2.0, a retirement security bill attached to a $1.7 trillion year-end spending bill and signed into law Dec. 29.
"They didn't leave a lot on the table. People always come up with new ideas and there will be new priorities, but with a new Republican leadership in the House with their own priorities, without Chairman (Richard) Neal driving a retirement agenda, it's likely that retirement isn't a front-burner issue, at least for a while."
SECURE 2.0, which builds off the original SECURE Act that Congress passed in 2019, includes dozens of provisions, including expanding automatic enrollment for employees joining 401(k) and 403(b) plans, lowering the eligibility requirement for part-time workers to join 401(k) plans from three years of consecutive work to two, and allowing employers to make matching contributions to a 401(k) plan, 403(b) plan or SIMPLE IRA based on qualified student loan payments.
The SECURE 2.0 package was made up of three bills introduced during the last Congress, including one from Rep. Richard Neal, D-Mass., a longtime retirement security advocate and chairman of the Ways and Means Committee last Congress, and the committee's now-retired Ranking Member Kevin Brady, R-Texas.
Retirement-related bills will likely still get introduced in the new session that began Jan. 3 and continues through 2024, but the issue won't rank high on the priority list in a divided Congress, sources said.
One bill that was introduced in December and is likely to be reintroduced in this Congress would grant workers without an employer-sponsored retirement plan access to a federal program similar to the $748.1 billion Thrift Savings Plan, the retirement system for 6.7 million federal employees and members of the uniformed services.
The bipartisan Retirement Savings for Americans Act, introduced in both the House and Senate, closely follows a March 2021 paper published by the Economic Innovation Group, a bipartisan public policy organization, that argued the TSP could be a model to build wealth for low-income workers.
John Lettieri, president and CEO of the Washington-based Economic Innovation Group, said the bill's introduction late last year was more of a messaging vehicle. "This is a way of planting the marker … to generate interest and attention and to generate feedback from a variety of stakeholders," he said in December. "Think of this as a dress rehearsal for a more substantial effort in the new Congress."
Mr. Neal has his own automatic enrollment bill that could also be reintroduced at some point. Originally floated in late 2017, the Automatic Retirement Plan Act would require employers that don't offer retirement plans to automatically enroll their workers in individual retirement accounts or 401(k)-type plans. Mr. Neal attempted to include the measure in Democrats' Build Back Better Act, but it was stripped from the package during negotiations before it passed in 2021.
Bradford P. Campbell, a Washington-based partner at law firm Faegre Drinker Biddle & Reath LLP and former assistant secretary of labor for the Employee Benefits Security Administration during President George W. Bush's administration, said bills that attempt to improve the retirement system moderately have a better chance of passing in Congress.
"We're going to see a number of different bills that run the spectrum from trying to tweak the current system to those that would fundamentally change the current system," Mr. Campbell said. "I think the reality is the tweaking bills, so to speak, have a much better chance of success."