Enacting Bipartisan Retirement Reform Package Could Help Us Move Past Acrimony

• By: admin
• On: 12/01/2020 10:19:33
• In: Politics
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Enacting Bipartisan Retirement Reform Package Could Help Us Move Past Acrimony

The 116^th Congress began its lame duck session on November 12. Time is short, but there is an opportunity right now to do something positive for retirement security by adopting a package of changes crafted by Republicans and Democrats working together.

The big opportunity is to swiftly enact HR 8696, introduced by House Ways and Means Committee leaders. The bipartisan package of retirement reforms is formally known as the Securing a Strong Retirement Act of 2020, or, less formally, Secure 2.0. Its passage would be a strong showing of cooperation, and a fitting way to defuse some of the tension arising from an extraordinarily acrimonious 2020 presidential election.

The bill was introduced October 27 by House Ways and Means Committee Chairman Richard E. Neal (D-Mass.) and the ranking Republican, Rep. Kevin Brady (D-Texas.)  It would build on the SECURE Act, which was signed into law in December 2019 and was aimed primary at defined contribution plans and IRAs.

HR 8696 would seek to strengthen retirement security through a mix of new and reintroduced proposals. 

For example, we know that one of the most effective ways to help people save is through automatic withdrawals at work. HR 8696 would automatically enroll workers in their workplace 401(k), 403(b) and SIMPLE plans as soon as they becomes eligible. While employees would always have the right to opt out, enrollment would generally become the default setting, rather putting the onus on employees to affirmatively sign up. The contribution rate would be increased each year following enrollment by one percentage point until it is capped at 10%.
 

The bill would expand the Saver's Credit by increasing the income limit to $40,000 for single filers, $60,000 for heads of household, and $80,000 for joint filers. The Saver's Credit would give eligible filers at tax credit of 50% of their contributions to an IRA or defined contribution plan, up to $1,500 per person.

The bill would provide 403(b) plans with the option to participate in multiple employer plans, provide relief from the “one bad apple” rule in the event of a participating employer's failure, and permit certain 403(b) plans to invest in collective investment trusts.

Among other changes, the bill would increase the age for required minimum distributions from traditional IRAs and defined contribution plans from 72 to 75; index to inflation the IRA catch-up contribution limit for individuals 50 and older; and allow employers to make matching contributions to a retirement plan for employees making qualified student loan payments.

The International Association of Fire Chiefs urged Congress on November 9 to pass the legislation, HR 8696, saying it would preserve and protect retirement benefits for firefighters and emergency workers.

HR 8696 isn't everything; it's not a dream come true for public pensions. There is a great deal more work to be done in our sphere to elevate the debate over a decent, dignified retirement. We need bold steps to strengthen retirement security, stabilize pension funds that have been harmed by broken promises and economic setbacks, and address a fundamentally flawed system of taxation.

But it is a good, solid start that could set the right tone for future at precisely the time when we need find a way to move forward in a positive, bipartisan manner.

You may also be interested in: Biden Plan Identifies Range of Retirement Priorities for New Administration, Is the Election Over, Yet?, The Biden-Harris Plan for Puerto Rico, Biden Unity Task Force Plan Underscores Retirement Priorities.