A bipartisan bill introduced in the U.S. House of Representatives claims to allow more flexibility for individuals as well as small companies to ensure Americans’ retirement preparedness.
Among several measures, the Securing a Strong Retirement Act of 2020 would raise the maximum age Americans must start taking required minimum distributions from their 401(k)s and individual retirement accounts from 72 to 75; link the IRA catch-up contribution limit for those aged 50 and over to inflation after 2021; raise catch-up contributions to $10,000 for Americans 60 and over who participate in employer-sponsored 401(k) and 403(b) plans, as well as adjust the threshold for inflation; and allow unrelated public education or non-profit employers on multiple-employer 403(b) plans, according to the bill introduced on Tuesday.
The bill also proposes to:
Rep. Richard Neal, D-Mass., chairman of the House Ways and Means Committee, and Rep. Kevin Brady, R-Texas, ranking member of the committee, introduced the bill.
The proposed legislation builds on the Secure Act, or the Setting Every Community Up for Retirement Enhancement Act, the federal government appropriations bill for fiscal year 2020 signed into law by U.S. president Donald Trump in December 2019, Rep. David Schweikert, R-Ariz., says in a press release.
Industry welcomes the proposal
The Insured Retirement Institute — with members representing 90% of annuity assets in the U.S. — says in a statement that several elements of its own five-point plan released earlier are included in the House proposal, including eliminating “barriers to allow greater use of lifetime income products,” as well as several recommendations, such as allowing exchange-traded funds to be offered in variable insurance products.
“We are eager to work with Chairman Neal and Ranking Member Brady and all of the members of the House Ways and Means Committee to expedite action on this bill and then work with Senate leaders to pass it and advance it to the White House,” Wayne Chopus, IRI president and CEO, says in a statement.
Chris Iacovella, CEO of the American Securities Association — with small and regional financial services companies as members — likewise says in a statement that his group applauds the bill and will work with policymakers to advance it.
Meanwhile, Sifma — the trade association for broker-dealers, investment banks and asset managers — is particularly supportive of the provisions aimed at small business retirement plans.
“The Securing a Strong Retirement Act of 2020 takes important steps toward enhancing the private retirement system and increasing retirement savings. In particular, we are pleased the bill includes provisions that will incentivize small businesses to offer retirement plans, enable older Americans to save more and hold on to their savings longer, and allow matching contributions for student loan payments,” Sifma president and CEO Kenneth E. Bentsen, Jr., says in a statement.
The Financial Services Institute, which represents 90 independent financial services firm members and their more than 160,000 affiliated financial advisors, says it’s still reviewing the proposal but commends the legislators’ approach.
“Our country is facing a retirement savings crisis that has been compounded by the economic impact of the Covid-19 pandemic. It is promising to see continued interest in Congress to address this critical issue, and we applaud the committee leadership’s bipartisan approach,” Dale Brown, FSI president and CEO, says in a statement.
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