CONGRESS ACTS TO EXPAND RETIREMENT PLAN ACCESS FOR WORKERS

Posted on December 19, 2019

Most Comprehensive Retirement Legislation In More Than A Decade

WASHINGTON, D.C. –Congress delivered today a long-awaited and much welcomed holiday gift to American workers by passing comprehensive retirement legislation within a larger measure that funds the federal government through the next fiscal year.

The retirement legislation addresses a deepening crisis where too few Americans are saving sufficiently to ensure an adequate income for their retirement years. The Senate voted 71-23 to approve the legislation. The House approved the same measure on Tuesday by a vote of 297-120. President Trump is expected to sign the bill by Friday.

The Setting Every Community Up for Retirement Enhancement (SECURE) Act will expand access to workplace retirement plans for millions more full and part-time workers, particularly small business employees.

The bill also expands opportunities for workers to obtain guaranteed lifetime income products, increases the age at which required minimum distributions must be taken from retirement accounts and repeals the age limit for IRA contributors – all of which can help ensure that retirees do not outlive their retirement savings.

Additionally, the SECURE Act will require that plan participants receive an illustration of how much monthly income their retirement savings will provide which can help them plan to increase their retirement savings.

“Our optimism that the SECURE Act would pass this year never wavered,” said Wayne Chopus, president and CEO of the Insured Retirement Institute. “We continued to work tirelessly to pass this common-sense solution to help expand opportunities for Americans to save for a secure and dignified retirement. At long last, this is now a reality.”

Chopus noted that the SECURE Act expands access to lifetime income products within retirement plans.

“Longer lifespans mean workers will have more years in retirement and will need a retirement financial plan that ensures they won’t outlive their savings. Greater access to lifetime income products within workplace retirement plans can provide monthly income for the life of a retiree,” he said.

The SECURE Act expands access to workplace retirement plans through open multi-employer plans or MEPs. This mechanism will permit small businesses to join together and pool their resources and share the costs to provide a retirement plan to employees.

The measure also enhances certain retirement plan features such as automatic enrollment and auto-escalation. This allows employers to enroll employees automatically into a retirement plan at a six percent rate of salary contribution instead of three percent. The provision also permits employers to increase employee contributions to the retirement plan up to a maximum of 15 percent of an employee’s annual pay. Employees can opt out of these features at any time.

SECURE also increases the age at which retirement account owners must take required minimum distributions (RMD) from 70 ½ to 72 years old. This allows older workers to continue to build savings without withdrawing retirement account funds if they do not need it.

The SECURE Act passed the House in May by a 417-3 bipartisan vote. A handful of senators objected to its consideration in the Senate, which stalled progress on the measure. It was finally attached to a government funding bill considered to be a “must-pass” measure to avoid a government shutdown.

IRI expressed gratitude to several leaders in Congress who strongly supported the SECURE Act and pushed hard for enactment.

“We want to thank House and Senate leadership for including the SECURE Act in the end-of-year funding legislation,” Chopus said. “We are also grateful to Ways and Means Chairman Richard Neal (D-Mass.) for his leadership in moving the SECURE Act so quickly through the House earlier this year,” Chopus said. “Ranking Member Kevin Brady (R-Texas) deserves credit for working in a bipartisan manner to advance the bill. Senate Finance Chairman Charles Grassley (R-Iowa) and Senator Ron Wyden (D-Ore.), the Committee’s ranking member, have been stalwart supporters of retirement security legislation for several years and were instrumental in this successful effort.”

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