Most financial advisors surveyed by the Nationwide Retirement Institute are in favor of the proposed Secure Act 2.0, believing its passing would financially benefit their clients.
The Securing a Strong Retirement Act of 2021 — referred to in the industry as the Secure Act 2.0 — was introduced in December. It aims to build on the Setting Every Community Up for Retirement Enhancement, or Secure, Act signed into law in 2019.
Among other measures, the bill would raise the age for beginning to take required minimum distributions; expand automatic enrollment in retirement plans; allow employers to incentivize employees to participate in retirement plans; remove RMD barriers for life annuities; raise limits on so-called “catch-up” contributions; allow employers to contribute to retirement plans matching employees’ student loan repayments; and eliminate additional taxes on certain distributions.
About 93% of advisors and financial professionals support the passing of the Secure Act 2.0, according to the Nationwide survey.
Nationwide commissioned Edelman Data and Intelligence to conduct a 13-question, online survey in February among 500 full-time advisors and financial professionals. The firm didn’t give a more detailed breakdown of the respondents.
Nationwide says this “overwhelming” support suggests the proposed legislation would be well timed, with 77% of the respondents agreeing that Covid-19 has led their clients to slow or stop contributions to retirement savings. Around half of the respondents reported that their clients’ financial security has been negatively impacted by the pandemic, the firm adds.
Half of the respondents indicated that when the Secure Act of 2019 passed, their clients updated their retirement plans. About 48% noted that their clients were able to save more in general because of the legislation, and were also able to increase their retirement account contributions and emergency savings.
Advisors believe many of the proposed components of Secure Act 2.0 would make it even easier for their clients to save for retirement and get back on track toward their goals, Nationwide says.
Around 93% believe allowing employers to match contributions under a 401(k) plan, 403(b) plan or a simple individual retirement account while employees make student loan payments will increase their clients’ financial security, for example.
“The first Secure Act legislation that passed in 2019 was a tremendous step forward in removing some of the obstacles people experience when saving for retirement,” said John Carter, president and chief operating officer of insurance and financial services company Nationwide Financial, in a statement.
“Secure Act 2.0 is a significant next step that will help many Americans take control of their financial futures. It’s great to see that advisors and financial professionals helping Americans prepare for retirement also see significant opportunities for their clients in the proposed legislation. We’re encouraged by the bipartisan support taking shape on Capitol Hill,” said Carter.
Nationwide says 94% of the respondents believe adding an emergency savings provision to the proposed legislation that would permit employees to withdraw or use limited retirement plan contributions for critical short-term financial needs without an early distribution tax penalty would help improve Americans’ financial security. And 91% believe that provision should be included in the legislation.
“We saw first-hand how many Americans turned to their retirement savings to bridge the gap when faced with a Covid-19-related emergency,” Eric Stevenson, president of Nationwide Retirement Solutions, says in a statement.
“By building an emergency savings component into a retirement plan, participants could tap funds without incurring excessive tax consequences or pulling their assets out at market lows,” he adds. “It’s our hope that lawmakers consider an emergency savings provision for Secure Act 2.0 or in a separate piece of legislation to address lessons learned during the Covid crisis.”
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