A new bill introduced in the House of Representatives, dubbed the “SECURE Act,” mirrors many of the provisions of the popular Retirement Enhancement and Savings Act (RESA) that failed to pass during the last Congress.
According to a statement from the Insured Retirement Institute, which has advocated for RESA as well as this follow-up legislation, the new bill was negotiated by a bipartisan team of House Ways and Means Committee Democrats and Republicans, including Committee Chairman Richard Neal, D-Massachusetts; Ranking Member Kevin Brady, R-Texas; Ron Kind, D-Wisconsin; and Mike Kelly, R-Pennsylvania.
The lawmakers say passage of the “Setting Every Community Up For Retirement Enhancement Act of 2019,” or SECURE Act, is necessary to help address the retirement plan coverage and savings gap impacting millions of American workers. They say the new legislation includes the core provisions of H.R. 1007, the Retirement Enhancement and Savings Act of 2019.
The IRI statement, quoting Wayne Chopus, president and CEO, suggests the House Ways and Means Committee could vote on the new measure as soon as next week. According to Chopus, in January, Chairman Neal placed retirement security among his top four legislative priorities for the year. The committee held a hearing in early February about retirement issues where several policy proposals contained in the new bill were discussed, Chopus adds.
“Three months ago, Chairman Neal put retirement security on his priority list and since then, we’ve had a hearing, negotiations, a new bill and a scheduled vote to advance it to the House floor,” Chopus says. “This is major progress.”
A summary of the bill provided by IRI says the SECURE Act contains popular measures to help Americans by “expanding opportunities to save for retirement; increasing access to lifetime income products; helping savers make more-informed decisions about their finances for retirement and enhancing features of workplace retirement plans. The SECURE Act will include provisions to remove restrictions on an employer’s ability to band together in a multiple employer plan (open MEP). Allowing small businesses to band together to achieve economies of scale and to delegate to a professional plan fiduciary responsibility for sponsoring the plan would facilitate more employers offering a retirement plan to workers.”
According to the summary, to help workers ensure that they do not outlive retirement savings, the SECURE Act would expand access to lifetime income products provided by insurers. The bill would, IRI says, remove a barrier which discourages employers from offering these products in their retirement plan menus by allowing the products to be included if they have been certified as meeting certain existing regulatory requirements enforced by state insurance regulators, such as capital and reserving standards.
A related technical change to the tax code will ensure the portability of lifetime income products, IRI says, and another provision will help savers “make more-informed decisions regarding their finances by providing lifetime monthly income estimates on benefit statements.”
The SECURE Act also will increase opportunities for workers to save by enhancing automatic enrollment and escalation features, for example by removing the auto-enrollment safe harbor cap and increasing the cap for automatic escalation of employee deferrals. Finally, the SECURE Act includes measures to require employers to allow long-term, part-time workers to participate in their workplace 401(k) plan, and a measure which would increase the current required minimum distribution (RMD) age limit to 71.