Senate Finance Committee Chairman Chuck Grassley (R-Iowa) Monday released the following statement after successfully securing the inclusion of legislation based on his bipartisan bill with Ranking Member Ron Wyden (D-Ore) in the year-end appropriations package. The SECURE Act includes the Retirement Enhancement and Savings (RESA) Act of 2019, legislation Grassley introduced earlier this year with Wyden.
“This legislation will help more Americans save for their retirement and help more American businesses invest in their employees’ future financial security,” Grassley said. “Government should be doing everything it can to help Americans save more of their own hard-earned money so they can retire with peace of mind, dignity and independence. Passing this bipartisan bill was one of my top priorities as chairman of the Senate Finance Committee this Congress. I’m glad after months of delay it will finally become law.”
The SECURE ACT includes reform proposals to increase retirement savings in several ways, including:
- Improving an existing type of retirement plan called a “multiple employer plan” or MEP. Such plans would be expanded to make it easier for small employers to join together to sponsor a single retirement plan for their workers. This would help millions of Americans save for retirement, and reduce plan-administration costs for small businesses;
- Helping workers to ensure they have adequate income in retirement by creating new rules for employers that offer lifetime-income arrangements in their retirement plans;
- Enhancing the ability of employees to transfer their retirement plan assets to a new retirement plan when they change jobs;
- Encouraging employees to increase their retirement savings annually through automatic increases in contributions to 401(k) plans and requiring employers to provide estimates of how much an employee’s account would provide during retirement if it were invested in an annuity; and,
- Continuing to allow an employee to pass a limited amount of an IRA or 401(k) account to a family member or other beneficiary to permit the beneficiary to continue the tax-deferred saving for retirement.
Among its additions to RESA, the SECURE Act increases the age for taking required minimum distributions from 70½ to 72. It also includes proposals to require businesses offering retirement plans to cover certain part-time workers, allow penalty-free withdrawals from retirement accounts to cover birth and adoption expenses, expansion of 529 savings plans to cover apprenticeship programs and certain student loan payments and changes to help certain home health worker increase retirement-plan contributions.
Notably, the SECURE Act also includes an amendment that addresses unintended consequences of reforms to the “Kiddie Tax,” to ensure middle-class families with children receiving unearned income are not subject to tax rates intended to prevent wealthy parents from taking advantage of their child’s lower rate. This amendment applies broadly, but in particular will benefit families who have children with income from military survivor benefits, applicable Native American tribal payments, Alaska permanent fund dividends and certain scholarships and grants.
Grassley and Wyden were both recently named 2019 Champions of Retirement Security by the Insured Retirement Institute. Op-eds from Grassley on retirement savings can be found here and here. A floor speech can be found here.