The House Ways and Means Committee unanimously passed a bill today that would make changes to how U.S. workers save for retirement, making it easier for annuities to find their way into plans.
Known as the Securing a Strong Retirement Act of 2021, the bill is colloquially known as "SECURE 2.0." It comes less than 18 months after the SECURE Act of 2019 was signed into law by then-President Donald Trump.
Like that legislation, the follow-up bill has bipartisan support. It is co-sponsored by Ways and Means Committee Chairman Richard Neal, D-Mass., and ranking member Kevin Brady, R-Texas.
The latest bill includes the following:
• Allows people who have saved too little to set more aside for their retirement.
• Offers low- and moderate-income workers a tax credit for contributions to a 401(k) or similar plan.
• Helps people with student loans save by letting employers make retirement plan contributions equal to what an employee pays on their loans.
• Further supports the use of annuities that provide guaranteed lifetime income in retirement.
• Creates a new incentive for small businesses to offer a retirement plan.
A key provision addresses the plight of mostly younger workers with limited financial resources and significant student debt. It would permit employers to contribute to a workplace retirement plan for employees making student loan payments.
For older workers, the legislation allows for larger catch-up contributions for Baby Boomers close to retirement. The legislation also increases the age at which retirees must take minimum distributions from retirement accounts, allowing more time for savings to grow.
"The Securing a Strong Retirement Act makes important changes that will have real-world, positive implications for retirement savers," said Susan Neely, president and CEO of the American Council of Life Insurers. "Incentives for small businesses to offer retirement plans, support for student loan borrowers with their repayment, and enhancements that guarantee those who are either close to or in retirement do not outlive their savings, are all key components."
The bill will have to go to the full House for a vote, then to the Senate.
“Retirement issues have a bipartisan legacy that continues with the Securing a Stronger Retirement Act,” said Wayne Chopus, IRI President and CEO. “We are confident that Congress will act quickly to help more people build economic equity and strengthen financial security to sustain them throughout their retirement years.”