The House Ways and Means Committee is ready to consider a bill on Wednesday to change the way U.S. workers save for retirement.
The measure, known as the Securing a Strong Retirement Act 2021, comes less than a year and a half after then-President Donald Trump signed another major retirement savings law, the 2019 Secure Act. Like this legislation, this new bill has bilateral support: its sponsors are Richard Neal, chairman of the Committee on Ways and Means, D-Mass., And ranking member Kevin Brady, R-Texas.
“Retirement has a two-party legacy that continues with Neal-Brady’s legislation,” said Wayne Chopus, CEO of the Insured Retirement Institute. “We are confident that Congress will act quickly to help more people build financial equality and strengthen financial security so that they can retain them throughout the retirement year.”
The provisions of the new bill, which is similar to the version published by Neal and Brady last year, will gradually raise the age at which individuals must begin to transition the required minimum distributions from a retirement account to 75 to 72 (Secure Act changed from 72 to 70½) and require most companies to who open a new 401 (k) plan (or equivalent job option) will automatically register their employees.
“We’ve learned over time that people who have signed up automatically are much more likely to stay on the plan,” said Melissa Kahn, CEO of State Street Pension Policy.
The bill would also index inflation to “catch payments” that people 50 or older can make to their retirement account (an additional $ 6,500 for a 401)[k] plans and $ 1,000 for an IRA). And it would increase the receivables of people aged 62-64 and allow employees to receive 401 (k) equivalent payments (from employers) when they pay off student loan debt instead of paying into their retirement savings account.
In addition, certain restrictions on long-term annuity contracts would be removed. Currently, the maximum amount that can go into the QLAC system is either $ 135,000 or 25% of the value of retirement accounts, whichever is lower. The law would remove the 25% cap.
“You are limited today in terms of how much you can put into QLAC,” Kahn said, adding that removing the cap would allow individuals with high account balances to reach the $ 135,000 mark.
The new measure is expected to be voted on during the committee’s subscription session on Wednesday, at which point the changes can be made and either approved or killed. If a bill leaves a committee, it will be put to the vote in plenary, even if its timing is uncertain.