Posted on June 18, 2020

WASHINGTON, D.C. – As Congress considers further relief for Americans suffering economic harm caused by the COVID-19 pandemic, the Insured Retirement Institute (IRI) is urging consideration of recovery measures to help retirement savers.

The House Ways and Means Select Revenue Measures Subcommittee is holding a hearing today to discuss relief to support American workers and families affected by COVID19. IRI submitted a statement for the record offering policy proposals that can help retirement savers recover from the economic harm inflicted by the pandemic.

Soon after much of the nation initiated a host of mitigation efforts to stem the spread of COVID-19, IRI announced a five-point plan to help America’s retirement savers who have been hit with the effects of job losses and market volatility. Prior pandemic relief measures included provisions to allow certain individuals who had been affected by COVID-19 the opportunity to tap their retirement accounts to address their immediate financial needs.

“Tens of millions have lost their jobs and their ability to make retirement contributions,” said Wayne Chopus, IRI President and CEO. “Many, especially those closest to retirement, have lost significant amounts of their accumulated retirement account balances which will take years to recoup, potentially causing them to work longer and having to postpone their retirement. As a result of these unanticipated and unplanned for events, the retirement security of Americans has been placed in a precarious position.”

IRI said that Congress should recognize the harm done to America’s retirement security and consider adopting its five-point plan to help workers saving for their retirement recover from the pandemic’s recession. The plan is comprised of bipartisan, common-sense measures, all built on legislation Congress has already seen in some form.

IRI’s plan includes:

Proposals to Help Americans Keep Money Longer

  • Increase Required Minimum Distribution (RMD) Age to 75
    • Workers will have more time to improve their retirement security by increasing the RMD age from 72 to at least 75, adjusting mortality tables to reflect longer life expectancies plus modifying and exempting certain annuity benefits and payments from the minimum income threshold test.
  • Eliminate Barriers to Allow Greater Use of Lifetime Income Products
    • By removing barriers that now limit an individual’s ability to insure against outliving retirement savings by purchasing a qualifying longevity annuity contract (QLAC), workers would be able to keep their tax-deferred savings longer and defer required minimum distributions applicable to 401(k)s and IRAs beyond age 72 to as late as 85.

Proposals to Help Americans Save More Now

  • Allow Catch-Up Retirement Contributions for Workers Affected by COVID-19
    • Any worker affected by COVID19 should be offered the opportunity to make retirement account catch-up contributions to help achieve a financially secure retirement without extending time in the workforce.
  • Expand Retirement Saving Opportunities for Non-Profit Organization Employees
    • As America’s small business employers and their employees return to work, specifically, to non-profit, public educational organizations and religious institutions, those employers should have the same ability to offer their workers a 403(b) retirement plan through a pooled employer plan (PEP) as afforded by the SECURE Act for other types of retirement plans.
  • Clarify Start-Up Tax Credit to Incentivize Small Businesses to Join PEPs
    • To encourage more recovering small businesses to begin or continue offering a retirement plan to their workers by using a PEP, Congress should amend the SECURE Act to clarify the start-up credit applies from the time a small business joins a PEP and not from the time the PEP begins operations.

The plan offers opportunities to allow individuals with retirement accounts that may have lost value to keep their money longer, allowing for more time to recoup losses. The plan also contains proposals which will afford Americans options to save more money now and let those additional savings grow over time.

“IRI remains eager to get to work on these initiatives,” Chopus said. “We welcome the opportunity to work with the Subcommittee and Congress to help American workers avoid a retirement savings crisis in the aftermath of this terrible pandemic as our nation begins its journey on the road to recovery.”