Retirement Legislation Picks Up Steam With 4 Bipartisan Bills

Four pieces of bipartisan retirement legislation were introduced this week indicating that Congress is turning its attention to retirement security—or at least pairing it with the next round of tax reform.

The four bills include some provisions that are similar to the Retirement Enhancement and Savings Act of 2018, a piece of legislation that was first introduced in 2016 and was introduced again in both the House and the Senate in March, where it has since stalled.

A Senate staffer told Bloomberg Law July 18 the four bills are designed as the next step after RESA, if it moves forward.

“Everyone’s first priority is to get RESA across the finish line,” the staffer said.

RESA (S. 2526, H.R. 5282) contains a slew of changes to the tax code and the federal Employee Retirement Income Security Act, making it the most sweeping piece of retirement legislation since the Pension Protection Act of 2006. It was introduced in the Senate by Sens. Orrin Hatch (R-Utah) and Ron Wyden (D-Ore.) and touches on everything from multiple employer plans, to automatic enrollment in 401(k) plans, to Pension Benefit Guaranty Corporation premiums.

“Chairman Hatch will certainly review the bills and discuss with committee members how they would like to move forward,” a Finance committee spokesperson told Bloomberg Law.

Tax 2.0

The four bills were each introduced just one day before the July 18 announcement by House Ways and Means Committee Chairman Kevin Brady (R-Texas) that he’ll include RESA in his draft “tax 2.0" legislative proposal that he plans to release next week.

Pieces of RESA were included in the first round of tax reform, but were later removed from the legislation.

The latest four pieces of legislation were introduced and co-sponsored by Sens. Heidi Heitkamp (D-N.D.), Cory Booker (D-N.J.), Tom Cotton (R-Ark.), and Todd Young (R-Ind.).

The bill introduced by Cotton, which includes a provision that would open multiple employer plans, would work with RESA, should it pass, a spokeswoman for Heitkamp told Bloomberg Law in an email July 18.

The other three bills are separate from RESA, but would help the legislation going forward by addressing broad retirement issues, she said.

The introduction of the bills makes it clear that “there is a lot of interest in retirement security in both chambers,” Michael Kreps, a lawyer with Groom Law Group in Washington, D.C., told Bloomberg Law.

Several people who discussed the proposals this week with Bloomberg Law weren’t sure that any retirement legislation would pass.

“Right now, it’s not clear that any retirement legislation will pass this year,” Kent Mason, a partner with Davis & Hartman, told Bloomberg Law. “All of the focus has been on RESA and until that gets resolved, it’s going to be hard to get anything else passed.”

Inside the Four Bills

Here’s a snapshot of the four bills introduced this week:

• The Strengthening Financial Security Through Short-Term Savings Accounts Act (S. 3218), introduced by Heitkamp, would allow employers to offer stand-alone short-term savings accounts for financial emergencies that would automatically deduct contributions from workers’ paychecks. The bill would “complement overall retirement savings” by helping reduce leakage.
• The Small Business Employees Retirement Enhancement Act (S.3219), introduced by Cotton, would change the criteria of ERISA so small businesses could offer retirement plans to their employees. These businesses would have more access to pooled plans, or combined mutual funds.
• The Refund to Rainy Day Savings Act (S. 3220), introduced by Booker, would allow taxpayers to postpone 20 percent of their tax refunds to a later date, placing it into a “Refund Rainy Day Fund.”
• The Retirement Security Flexibility Act (S. 3221), introduced by Young, would amend the tax code to add nondiscrimination safe harbor for automatic contribution arrangements that would make it easier for employers to offer the plans.

Heitkamp’s and Booker’s bills will be sent to the Health, Education, Labor, and Pensions Committee, and Cotton and Young’s bills will go to the Finance Committee for consideration.