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Senate Finance Committee Advances Retirement Package (1)

June 22, 2022, 3:58 PMUpdated: June 22, 2022, 5:47 PM

The Senate Finance Committee advanced a retirement legislation package Wednesday, setting the stage for a final push to make it law by the end of the year.

The Enhancing American Retirement Now (EARN) Act, which the committee reported favorably by a vote of 28-0, has several provisions similar to the House’s retirement package (H.R. 2954), including a provision that would allow employers to treat workers’ student loan repayments the same as 401(k) contributions.

The House passed its retirement bill in March by a 414-5 vote. Last week, the Senate Health, Education, Labor and Pensions Committee advanced legislation (S. 4353) that would improve retirement coverage for part-time workers and facilitate access to workplace emergency savings accounts.

The push will now begin to combine elements of the three bills and hold floor votes in the Senate and the House on the entire package. Lawmakers have said that they aim to send the final package to President Joe Biden by the end of the year.

The Finance Agenda

The EARN Act would also increase the minimum age by which workers must begin drawing down on their retirement savings to 75 from 72 and extend pooled plan designs to nonprofit 403(b) plans.

Like the House bill, the EARN Act would also create a lost-and-found retirement plan database to help reconnect workers with misplaced or forgotten retirement benefits from past jobs.

Senate Finance Chairman Ron Wyden (D-Ore.) said at the mark-up that the system wasn’t doing enough to help people set money aside. “The need for reforms is even more urgent at a time when prices are rising and eating into family budgets,” Wyden said. “More Americans are now reporting that they expect that they won’t have enough to set aside to retire anytime soon.”

Ranking member Mike Crapo (R-Idaho) said the retirement bill was the product of months of bipartisan work and would “increase participation in retirement plans, strengthen and encourage private retirement savings, and make it easier for employers to offer retirement plans.”

The HELP committee’s bill would allow employers to use retirement plan assets to pay off incidental plan design expenses, such as automatic enrollment—a key plank of the House bill.

The Finance Committee bill would also raise limits on mandatory retirement plan cash-out distributions to $7,000 from $5,000. It would facilitate the inclusion of side-car emergency savings accounts to retirement plans, letting workers save up to $2,500, pre-tax and penalty-free.

The retirement bill, popularly known as Secure 2.0, is seen as a sequel to the broad retirement overhaul bill that was signed into law in 2019.

“It’s all designed to facilitate saving for your retirement and that is a very good thing,” Sen. Pat Toomey (R-Pa.) said during a Bloomberg Tax event Wednesday. “I don’t see why this can’t pass through some mechanism by the end of the year.”

(Adds Toomey quote in 12th paragraph.)

To contact the reporters on this story: Kaustuv Basu in Washington at kbasu@bloombergtax.com; Austin R. Ramsey in Washington at aramsey@bloombergindustry.com; Richard Tzul at rtzul@bloombergindustry.com

To contact the editors responsible for this story: Patrick Ambrosio at PAmbrosio@bloombergindustry.com; Alex Clearfield at aclearfield@bloombergindustry.com; Genevieve Douglas at gdouglas@bloomberglaw.com