Congress wants to make more changes to the U.S. retirement system

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Less than two years after the Secure Act ushered in significant changes to the nation’s retirement system, more modifications may be on the horizon.

Two similar, bipartisan bills — one each in the House and Senate — aim to build on that 2019 legislation as a way to bolster the ranks of savers and increase retirement security. While the measures are in the early stages of the legislative process, observers expect there to be some movement on them in the coming months.

“The outlook is positive,” said Timothy Lynch, senior director at the law firm of Morgan Lewis. “There’s bipartisan support, so there’s likely to be action sooner rather than later.”

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However, he said, the differences between the bills would need to get worked out. And, exactly how to offset any resulting revenue losses could be a sticking point.

“The House bill has some ‘pay-fors,'” said Paul Richman, chief government and political affairs officer at the Insured Retirement Institute. “The Senate bill has none at all, but that could change.”

Called the Securing a Strong Retirement Act — and nicknamed “Secure 2.0” — the House bill received unanimous approval last month from the Ways and Means Committee. Its sponsors are the panel’s chairman, Richard Neal, D-Mass., and ranking member Kevin Brady, R-Texas.

The Senate bill — called the Retirement Security and Savings Act and sponsored by Sens. Ben Cardin, D-Md., and Rob Portman, R-Ohio — has not yet received committee attention but is expected to next month, according to a person familiar with the bill’s path forward.

Here are some of the main provisions in the two measures, with their differences noted, that would impact retirement savers and retirees.

Student loan debt and retirement savings

Catch-up contributions

The Senate bill also would index the IRA amount to inflation, but is more generous with the 401(k) catch-up contribution of $10,000: It would apply to people age 60 or older.

The House bill also would change the tax aspect of catch-up amounts as a way to offset any revenue losses from other provisions.

That is, all catch-up contributions to 401(k) plans and the like would be treated as Roth contributions — i.e., after tax — starting next year. Current law allows workers to choose whether to make those contributions on a pretax or Roth basis (assuming their company gives them the choice). 

Additionally, matching contributions from employers currently can only be made to pretax accounts. A provision in the House bill would allow them to be post-tax (Roth) contributions if the employee wanted to go that route.

Required minimum distributions

Annuity changes

Auto-enrollment in 401(k) plans

Other items

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