Two Retirement Bills Under Consideration

On May 23, 2019, the House approved the “Setting Every Community Up for Retirement Enhancement (“SECURE Act”) by a vote of 417-3.  The SECURE Act generally provides for an increase in retirement savings and improves portability of lifetime income options between plans (Summary). More specifically, the SECURE Act includes provisions that:

  • Require 401(k) plans to offer participation to part-time employees who work at least 500 hours in three consecutive years;
  • Simplify the 401(k) safe harbor rules relating to the notice requirement and limits on plan amendments;
  • Increase the maximum for safe harbor automatic enrollment contributions from 10% to 15%;
  • Create a new tax credit for employers to defray startup costs for adding an automatic enrollment feature to an existing Section 401(k) plan;
  • Require defined contribution plans to provide participants with an estimate of the monthly annuity equivalent of their plan balance;
  • Increase the required age for minimum required distributions from 70-1/2 to 72;
  • Permit unrelated employers to participate in a “Pooled Employer Plan” that would be treated as single plan for ERISA purposes;
  • Provide nondiscrimination testing flexibility for certain defined benefit plans that have been closed to new participants to permit existing participants to continue to accrue benefits.

The Senate Committee on Finance has approved the “Retirement Enhancement and Savings Act” (“RESA”) which is similar to the SECURE Act.  We will continue to monitor this.

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