SECURE 2.0 is expected to be adopted this year – PLANADVISER | CarTailz


Several Washington insiders say the package of three pension reform bills known as “SECURE 2.0” is set to be consolidated and passed sometime in December, complementing the 2019 legislation aimed at increasing access to pension plans and savings in the to improve the United States

Two of the three bills, the Enhancing American Retirement Now (EARN) Act and the Retirement Improvement and Savings Enhancement to Supplement Healthy Investments for the Nest Egg (Rise and Shine) Act, have been introduced and passed by the Senate for Finance and Health, Education and Labor, respectively. Pensions committees elected unanimously in June.

The third, the Securing a Strong Retirement Act, passed the House of Representatives in May by a vote of 414 to 5.

The original SECURE Act was the Setting Every Community Up for Retirement Enhancement Act of 2019.

Industry experts and Washington insiders expect the latest legislation to be consolidated into a single bill and passed sometime in December, during the lame duck period, before the new Congress is sworn in next year. The final bill would likely be appended to legislation that is imperative to pass, such as B. a financing law to replace the current budget decision, which expires on December 16th. Although there are many differences between the three bills, none are likely to prevent their final passage, sources said.

Two or more of the new bills share 39 provisions that observers say are most likely to survive in more or less identical form in the final package. Some important examples of provisions included in multiple invoices are:

  • The reduction in the number of years of service after which part-time workers must be eligible for an employer-sponsored pension will be reduced from three to two (all three bills).
  • Employers can match student loan payments to employees against contributions to retirement plans (SSRA and EARN).
  • Victims of domestic violence can withdraw $10,000 or 50% of the total value of their account with no SSRA and EARN penalties, whichever is less.
  • An employee has the option to designate employer contributions as aftertax income taxable in the current tax year rather than when withdrawn (SSRA and EARN).

The bills also contain some controversial issues, such as: B. different timelines for catch-up contribution changes and required minimum distribution changes, and whether automatic enrollment in employer-sponsored pension plans should be required or encouraged through tax credits.

There are also provisions that exist in some form only in a bill. For example, only the EARN Act provides:

  • Creates permanent rules for early withdrawals following a disaster, allowing up to $22,000 to be withdrawn without penalty.
  • Allows starter 401(k)s or plans to be deducted from an employee’s compensation without agreement with the employer for small businesses.

Senators Ben Cardin, D-Maryland, and Rob Portman, R-Ohio, published an op-ed in The Hill last week calling for SECURE 2.0 to pass this year and expressed optimism that it would . They supported certain provisions of the EARN Act, the Senate Finance Committee’s version. Specifically, they highlighted the student loan, an expanded tax credit for savers, a national plan database or “Lost and Found” to help participants find and retrieve retirement contributions, and increased small business tax credits to incentivize employers to set up retirement plans give.

The op-ed cited an AARP study that found only 17% of Americans are very confident they will have enough money to retire. However, the study also found that 42% are somewhat confident, 20% are not very confident and 16% are not entirely confident.

The bills are also backed by industry executives. For example, Eric Stevenson, President of Nationwide Retirement Solutions, supports legislation and particularly regulations that reduce barriers that prevent workers from enrolling in their employer’s plans. He supports provisions that allow for a $1,000 non-punishment payout for certain qualifying emergencies, such as: He notes that only 40% of part-time workers have access to retirement accounts.

Stevenson also explains that the concept of a “lost and found” plan is helpful because most workers change employers many times in their lives and lose track of many old retirement accounts from previous employers. The EARN Act assigns this responsibility to the Department of Treasury, while the SSRA assigns it to the Department of Labor.

According to Stevenson, the Nationwide Retirement Institute surveyed financial advisors and found that 93% supported the legislation and believed it would benefit their clients.

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