An industry trade organization launched a lobbying push today for legislation that combines the retirement crisis with the ongoing the COVID-19 economic recession.
The proposal would further ease rules to enable retirement savers to retain and restore their nest eggs, said the Insured Retirement Institute. IRI sent its "five-point plan" to President Donald Trump and members of Congress this morning. It includes:
Proposals to help Americans keep money longer:
• Increase RMD age to 75
• Eliminate barriers to allow greater use of lifetime income products, such as annuities
Proposals to help Americans save more now:
• Allow catch-up retirement contributions for those affected by COVID-19
• Expand retirement saving opportunities for non-profit organization employees
• Clarify start-up tax credit to incentivize small businesses to join MEPs/PEPs
Many of the ideas were included in earlier versions of legislation that eventually became the SECURE Act, passed by Congress at the end of 2019. The Setting Every Community Up for Retirement Enhancement Act included 29 provisions, many of them changing formulas that govern contributions and distributions to retirement plans.
Notably, SECURE removed barriers to small businesses banding together to form multiple employer plans. Once the COVID-19 pandemic spread across the United States, shuttering businesses, Congress followed up with the CARES Act, which provides cash payments to Americans, along with loans to small businesses and other funds.
Now IRI insists the next bill is needed to help retirement savers weather the pandemic and emerge with some hope for retirement. Surveys are already showing that 30% of Americans believe they will have to postpone retirement, said Wayne Chopus, president and CEO of IRI.
"Many of the numbers we are seeing paint a very stark picture," he said during a conference call this morning. "We feel this may exacerbate the country's retirement crisis."
IRI is drawing on lessons from the aftermath of the 2008-09 economic crisis, Chopus said. At that time, many Americans lost substantial chunks of their retirement plans as markets crashed.
The IRI proposal focuses on further easing rules to permit Americans to both keep their tax-deferred savings longer, make catch-up contributions, and make it easier to roll money into qualified longevity annuity contracts.
Introduced in 2014, QLACs can only be used in traditional IRAs and some select employer retirement plans. Current rules for a QLAC is the lesser of 25% of your total IRA assets or $135,000. The IRI proposes to increase those numbers.
That is just an example of common-sense changed warranted in an emergency to help Americans stay on solid financial footing as retirement approaches, IRI officials said.
“What IRI is proposing today will help Americans as our nation begins its recovery from the COVID-19 pandemic by enhancing savings opportunities during their remaining working years so they can enjoy a secure and dignified retirement,” Chopus said.
InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 year s of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.