With the passage of the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act) May 23, the House of Representatives is setting up U.S. retirement plans for significant reform. The SECURE Act aims to increase the accessibility of retirement plans and ease some current rules.
Key provisions include:
Increasing the automatic enrollment safe harbor deferral cap to 15% (from the current 10%) after first plan year.
Requirement to include a lifetime income disclosure (monthly income stream) on benefit statements.
Fiduciary safe harbor for selection of lifetime income provider (i.e. annuity provider).
Allowing portability of lifetime income options (i.e. annuities).
Allowing long-term, part-time employees to participate in 401(k) plan.
Penalty-free withdrawals from retirement plans for birth or adoption of a child.
Increase the required minimum distribution (RMD) age to 72 (from 70½).
Easing rules pertaining to multiple employer plans (MEPs) to allow smaller employers to band together to gain efficiencies.
The legislation now goes to the Senate for debate and consideration. It’s also important to note the Senate has been working to pass the Retirement Enhancement and Savings Act (RESA) which has a number of provisions similar to the SECURE Act.
For this reform to happen, leaders in both the House and Senate must come to a compromise and advance a retirement reform bill to the president. Congress failed to pass similar legislation at the end of 2018.
The full text of the Bill can be found here.
If you have questions about your current retirement plan, contact an advisor at Fi3 today.
Sources: SECURE Act Summery Final 3.19, Ways & Means Committee; Summary H.R. 1994 – 116th Congress (2019-2020)