A Stalled Retirement Bill Could Be Passed in 2022. What It Will Mean for You.

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The Secure Act 2.0 passed the House Ways and Means Committee in May before being stalled unanimously.

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bipartisan legislation aimed at helping Americans build their retirement savings stuck in 2021According to people in the financial-services industry, 2022 has better prospects.

The law would expand workers’ automatic enrollment in employee-sponsored savings plans and delay the age when retirees must start taking distributions from them.

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The Securing a Strong Retirement Act 2021, sometimes called Securing Act 2.0, passed the House Ways and Means Committee unanimously in May, setting it up for a vote on the House floor. The bill later stalled as Washington’s attention shifted to President Biden’s Build Back Better proposal, a multitrillion-dollar spending bill.

Diane Boyle, senior vice president of government relations at the National Association of Insurance and Financial Advisors, said she is “optimistic that this will pass” in 2022. The bill was put on hold because Democrats included comprehensive retirement savings provisions in the build. Back better laws, components that appear to be expired, she said.

The Securing a Strong Retirement Act was introduced by US Representative Richard Neill (D-Mass.), whose office declined to comment on the status of the bill. JP Freire, a spokesman for the Republicans on the House Ways and Means Committee, said they hope to “get back to making progress” on the bill in 2022.

“Unfortunately, Democrats jeopardize the hard work of both sides by jamming partisan provisions into their tax-raising and spending bills,” Freire said. “As a result, we now have to wait to find out what actually passes, if anything. We believe bipartisan work is the best path forward in securing a strong retirement act.”

Among other things, a strong Retirement Act would secure:

Expand workers’ automatic enrollment in employer-sponsored retirement savings plans. Employees will automatically be enrolled in plans like 401(k)s and 403(b)s unless they opt out. Workers’ initial automatic contribution will be between 3% and 10% of pretax income, and will increase by 1% each year until that amount reaches 10%.

Increase the age at which seniors must take required minimum distributions (RMDs) from their retirement savings accounts from 72 to 73. The bill will later increase to 74 starting in 2029 and 75 starting in 2032.

Reduce the penalty for failure to carry the RMD from 50% to 25%. Further, if this failure is rectified in a time bound manner, as defined by the Bill, the penalty will be further reduced to 10%.

Increase the so-called catch-up contribution limit for employees aged 62 to 64. In 2021, these workers were allowed to contribute up to $6,500 to their retirement savings plans beyond the limits otherwise applicable. This bill would increase that amount to $10,000 and index it for inflation.

Index the catch-up contribution limits for individual retirement accounts for inflation. Currently, savers age 50 and older can contribute an additional $1,000 annually to their IRAs, but this limit is not indexed for inflation.

Allow employers to match an employee’s student loan payment by making an equal contribution to that employee’s retirement savings plan. This provision is intended to help workers who can’t afford to save for retirement because of high student-loan debt, which causes them to miss out on their employer’s matching contributions to retirement savings plans.

Sensers Rob Portman (R-Ohio) and Ben Cardin (D-MD) have introduced similar legislation, the Retirement Security and Savings Act, which has yet to move through the Senate Finance Committee.

Dan Zielinski, chief strategic communications officer of the Insured Retirement Institute, which represents life insurers, asset managers and others, said there is a “significant appetite” on Capitol Hill to pass the retirement savings bill. He said the Senate and House would likely round out provisions that both houses of Congress could pass as a stand-alone bill or as part of a wider legislation.

Zielinski pointed to the 2019 SECURE Act (Establishment of Every Community to Increase Retirement), a similar bill signed into law as part of the appropriations bill for fiscal year 2020.

“Usually, these bills are linked to some big vehicle,” he said. “Phase 1 is to get consensus on a comprehensive package for retirement security, and Phase 2 is to identify potential vehicles to which it can be attached, and we are confident that we will see those opportunities. Corridor this issue. With support from both sides, we are quite optimistic that this can happen in 2022.

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