Last week, a new bill was introduced in the U.S. Senate to strengthen America’s retirement system. According to a recent FA Magazine article, the Retirement Security & Savings Act includes more than 50 provisions designed to help people who have not saved enough money for retirement. The bill was introduced by Senators Rob Portman (R-OH) and Ben Cardin (D-MD).
Additionally, the bill would enhance tax breaks and ease regulations to encourage more small businesses to offer workplace retirement plans, such as 401(k), including annuities. In general, financial advisors are excited about bill, especially the provision that would raise the required minimum distribution age to 75.
“The bill would stop forcing retirement savers to take distributions at age 70 ½, replacing that age with 75,” said Scott Barr, a financial advisor for Edward Jones in Zanesville, Ohio. “The bill will also help small-business owners establish a retirement plan by giving them a bigger tax credit to cover their plan-related expenses. This is exactly what is needed to broaden retirement coverage.”
Many financial experts believe that the bill would improve retirement security by expanding access to retirement plans, streamlining disclosures, and reducing costs for small businesses. Others are saying that the bill has “many common-sense changes” to current law that improve people’s ability to save for retirement.
Included in the changes is the provision that encourages sponsors to adopt automatic contribution plans with higher contribution rates, simplify disclosures and allow individuals saving via large 403(b) plans to enjoy the same lower costs that their 401(k) counterparts enjoy.
Other popular provisions include those that ease current regulations to allow annuities to be included in workplace retirement plans for the first time. The bill would remove barriers for annuity contracts, change required minimum distribution rules, facilitate annuity portability and clarify current “substantially equal periodic payment” rules.
“Many Americans are living 20 years, 30 years or longer in retirement and face the real possibility of outliving their savings,” said Susan K. Neely, president and CEO of the American Council of Life Insurers. The bill, she added, “addresses this challenge by making meaningful changes that provide more choices for people to secure lifetime income in retirement.”
Groups, like the AARP and Women’s Institute for Secure Retirement, have also gotten behind the legislature. The bill would allow part-time workers, many of whom are primary caregivers for kids and older family members, to take part in workplace retirement plans.
“In particular, we support the bill’s extension of retirement plan coverage to part-time workers, which will significantly improve retirement savings options for millions of uncovered workers,” said David Certner, legislative counsel and policy director at AARP.
Last week, during a hearing on the retirement crisis, Senate Finance Committee Chairman Chuck Grassley (R-Iowa) said that he hopes to have legislation on President Trump’s desk by the end of the year.
Written by Rachel Summit