The House Committee will be reflecting on the Secure 2.0 Retirement Act this week. Here’s what’s inside
Richard Neal, Chairman of the House Ways and Means Committee.
Matt Stone | Boston Herald | Getty Images
The House Ways and Means Committee stands ready to consider a bill on Wednesday that will introduce changes to the way U.S. workers save for retirement.
The move, known as the 2021 Strong Retirement Act, comes less than a year and a half after then-President Donald Trump enacted another major retirement provision, the 2019 Secure Act. Like this legislation, this new bill is supported by both parties: Its sponsors are Ways and Means Committee Chairman Richard Neal, D-Mass., And Senior Member Kevin Brady, R-Texas.
“Retirement issues have a bipartisan legacy that continues with the Neal-Brady legislation,” said Wayne Chopus, president and CEO of the Insured Retirement Institute. “We are confident that Congress will act quickly to help more people build economic justice and strengthen financial security so that they can stay through their retirement years.”
More from the new path to retirement:
Check out more retirement news here.
Among the provisions in the new bill, which is similar to a version released by Neal and Brady last year, is the gradual increase in the age at which individuals aged 72 and over must make the required minimum distributions from their retirement accounts to 75 (which became the Secure Act Changed) Most companies starting a new 401 (k) plan (or similar workplace option) will have their employees automatically enrolled.
“We have learned over time that people who automatically enroll are much more likely to stay on schedule,” said Melissa Kahn, State Street executive director for retirement planning.
The bill would also index the inflation of the “catch-up” contributions people 50 and older can make to their retirement accounts (an additional $ 6,500 for 401)[k] Plans and $ 1,000 for IRAs). And it would increase those catch-up amounts for those ages 62-64, and allow workers to receive 401 (k) matching contributions (from employers) when they pay student loan debts instead of contributing to their retirement assets.
In addition, certain restrictions on qualifying longevity annuity contracts would be lifted. Currently, the maximum that can flow into a QLAC is either $ 135,000 or 25% of the value of your retirement accounts, whichever is lower. The bill would remove the 25% cap.
“You’re somewhat limited today on the amount you can invest in a QLAC,” Kahn said, adding that removing the cap would allow those with high bank balances to hit that $ 135,000 limit.
The new measure is expected to be voted on during the committee’s markup meeting on Wednesday, when changes could be introduced and either adopted or killed. If the bill is out of committee, a full House vote is scheduled, although the timing is uncertain.