Home Committee OKs SECURE 2.0, enhance choices for the retirement plan
The House Ways and Means Committee unanimously passed bill today that will introduce changes to the way U.S. workers save for retirement, making it easier for pensions to find their way into plans.
Known as the Strong Retirement Act of 2021, the bill is colloquially known as “SAFE 2.0”. It comes less than 18 months after then-President Donald Trump incorporated the SECURE Act of 2019 into law.
Like this legislation, the follow-up law is supported by both parties. It is co-sponsored by the Chairman of the Ways and Means Committee, Richard Neal, D-Mass., And Ranking member Kevin Brady, R-Texas.
The latest invoice includes the following:
• Allows people who have not saved enough to set aside more for their retirement.
• Offers low- and middle-income workers a tax credit for contributions to a 401 (k) or similar plan.
• Helps people save on student loans by letting employers contribute to retirement plans equal to what an employee pays for their loan.
• Also supports the use of annuities that provide guaranteed income for life in retirement.
• Creates a new incentive for small businesses to offer a retirement plan.
An important provision addresses the plight of mostly younger workers with limited financial resources and substantial student debt. This would allow employers to contribute to a company pension plan for employees who pay student loans.
For older workers, the legislation provides for larger catch-up contributions for baby boomers who are about to retire. The legislation also increases the age at which retirees are required to make minimum distributions from retirement accounts to allow more time for savings to grow.
“The Strong Retirement Act is making important changes that have a real, positive impact on retirement savers,” said Susan Neely, president and CEO of the American Council of Life Insurers. “Incentives for small businesses to offer retirement plans, assistance to student loan borrowers with their repayment, and enhancements to ensure that those nearing or retiring from their savings are not key components.”
The bill has to go to the whole House for a vote and then to the Senate.
“Retirement issues have a bipartisan legacy that continues with the Strengthening Retirement Act,” said Wayne Chopus, President and CEO of IRI. “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.”