Legislation designed to enhance retirement savings could move quickly through Congress with lawmakers in both chambers backing the bipartisan proposal.
The bill (H.R. 8696), introduced by House Ways and Means Chairman Richard Neal (D-Mass.) and ranking member Kevin Brady (R-Texas), would expand on the 2019 retirement law known as the SECURE Act by automatically enrolling employees in their workplace’s 401(k) plans while increasing the required minimum distribution age to 75, from 72. The legislation, introduced Oct. 27, also would encourage small businesses to offer retirement plans and increase a tax credit for contributions to an individual retirement account.
A hearing on the new Neal-Brady bill is possible during the lame-duck session of Congress. A spokesperson for Ways and Means Democrats told Bloomberg Tax that Neal intends to move the bill quickly.
Several of his colleagues in the Senate signaled their interest in advancing more retirement legislation.
“The SECURE Act was an important step forward, but we need to do much more to help workers save for retirement,” Sen. Ron Wyden (D-Ore.) said in a statement, adding that he looked forward to getting a bill done in the next Congress.
Sen. Ben Cardin (D-Md.), a long-time champion of expanded retirement savings, also said he looked forward to retirement legislation being considered by the next Congress, which will convene in January. Cardin and Sen. Rob Portman (R-Ohio) introduced their own bill (S. 1431) last year, which contains similar provisions to the latest House bill.
Brady told reporters Oct. 29 that he is in touch with Senate colleagues about the retirement bill. Brady said his proposal with Neal “made it clear, by incorporating number of Senator Portman and Cardin’s retirement proposals, that we’re on the same page with them.”
A statement issued by Portman highlighted 20 different provisions from S. 1431 that made it into the new House proposal, including an excise tax cut for individuals who fail to take a minimum distribution, allowing student loan repayments to qualify for an employer retirement match, and a higher “catch-up” contribution option for people 60 and over.
More Financial Security
The retirement tax break-laden SECURE Act passed last December as part of a large government funding package (Public Law 116-94). That law included tax credits for starting employer-sponsored retirement plans, allowing some part-time workers to participate in employer-sponsored 401(k) plans. It also repealed an age limit on individual retirement accounts, thus allowing for tax-free savings until death.
Versions of the SECURE Act stalled for years until the Senate attached it to the year-end appropriations bill, following months of resistance from Republican senators like Pat Toomey (Pa.) and Ted Cruz (Texas).
The SECURE Act encore by Brady and Neal, which features myriad tax breaks and technical changes to its predecessor, has significant support from outside groups.
Trade groups, including the American Benefits Council and Insured Retirement Institute, as well as companies like Prudential Financial Inc., issued supporting statements commending the House duo for keeping retirement security front and center during the pandemic.
The Ways and Means panel highlighted that the proposal also has the backing of the AARP.
“While Social Security continues to be the bedrock of retirement income for most American workers and their families, individuals want and need additional retirement income sources, and we appreciate your bipartisan work to make a number of improvements to current law,” Bill Sweeney, AARP’s senior vice president for government affairs, said in a letter released by the committee.
Portman, speaking during an Oct. 30 webinar hosted by the Urban-Brookings Tax Policy Center, was optimistic about the retirement bill’s chances, no matter how Tuesday’s elections play out.
“I think it’s very possible—regardless of which administration is elected or reelected—for us to move forward,” Portman said.