On Tuesday, October 27, 2020, the House Ways and Means Committee Chairman Richard Neal (D-MA) and Ranking Member Kevin Brady (R-TX) introduced the Securing a Strong Retirement Act of 2020 (referred to as SECURE Act 2.0), which aims to expand on the SECURE Act that was enacted in December 2019. The goal of this bipartisan legislation is to “help a greater number of Americans successfully save for a secure retirement.”
“COVID-19 has only exacerbated our nation’s existing retirement crisis, further compromising Americans’ long-term financial security,” Neal said in a statement. “With the Securing a Strong Retirement Act, Ranking Member Brady and I build on the landmark provisions in the SECURE Act and enable more workers to begin saving earlier—and saving more—for their futures.”
The proposed legislation includes but is not limited to, the following key provisions:
- Promote savings earlier for retirement by enrolling employees automatically in their company’s 401(k) plan when a new plan is created.
- Create a new financial incentive for small businesses to offer retirement plans.
- Increase and modernize the existing federal tax credit for contributions to a retirement plan or IRA (the Saver’s Credit).
- Offer individuals 60 and older more flexibility to set aside savings as they approach retirement.
- Allow individuals to save for retirement longer by increasing the required minimum distribution age to 75.
- Allow individuals to pay down a student loan instead of contributing to a 401(k) plan and still receive an employer match in their retirement plan.
- Make it easier for employees to find lost retirement accounts by creating a national, online database of lost accounts.
While the chance of SECURE Act 2.0 passing before the end of the year is slim, it is still worth noting that the legislation may pick up steam once the presidential election has been finalized. It is not clear at this time whether this bill will have the same level of bipartisan support as the original SECURE Act.
This newsletter is intended to provide general information on matters of interest in the area of qualified retirement plans and is distributed with the understanding that the publisher and distributor are not rendering legal, tax or other professional advice. Readers should not act or rely on any information in this newsletter without first seeking the advice of an independent tax advisor such as an attorney or CPA.
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