Expanding access to retirement savings accounts remains a hugely popular issue for congressional lawmakers from both parties. When they return from their summer recess in September, lawmakers will begin reconciling three bipartisan tax bills that would make further enhancements to the current retirement savings system.
The Securing a Strong Retirement Act of 2022 passed the House of Representatives by a 414-5 vote on March 29 and two related Senate bills, the EARN Act and Rise & Shine Act, passed in June.
The legislative effort together is commonly referred to as SECURE 2.0, because it builds on the Setting Every Community Up for Retirement Enhancement (SECURE) Act enacted in 2019.
Experts remain optimistic that a final bill will be passed before the end of the year. While it’s not certain what the final bill will look like, here are some key provisions from the House bill:
- Auto-Enrollment. Small businesses that offer a 401(k) or 403(b) retirement plan would have to automatically enroll new employees at a minimum contribution rate of 3% that is increased annually until it reaches 10%. Employees would have the ability to opt out or elect a different contribution rate. Existing plans would be grandfathered, and new and small businesses (less than 10 employees) would be given an exemption from auto enrollment;
- Raising the RMD. The age at which an individual must start taking money out of their retirement account, otherwise known as the Required Minimum Distribution, would be raised from 72 to 75.; and
- Helping Workers With Student Loan Debt. Employers that make matching contributions to retirement accounts can now do so on the basis of both an employee’s individual contributions and their student loan payments. For example, if an employee has paid $100 to a qualified, federally recognized student loan in a given month, their employer could contribute $100 to their 401(k).
For a more detailed breakdown, click here.