Last Updated: July 17, 2019

Over a decade has passed since Congress has made significant legislative updates in the retirement system, but change could be afoot, and we thought it was newsworthy to highlight the details.

Several months ago, the U.S. House of Representatives passed the Setting Every Community Up for Retirement Enhancement (SECURE) Act. It would increase opportunities for workers to save in their 401(k) plans by:

  • Enhancing automatic enrollment
  • Allowing long-term part-time workers to participate in 401(k) plans
  • Raising the age for required minimum distributions to 72 from 70 ½

The “cost” to the government to fund this incremental tax sheltering would be “paid for” by accelerated distribution rules for many designated beneficiaries. This would nullify the technique used currently by many non-spousal beneficiaries to take distributions based on their life expectancies, which allows them to stretch out the tax sheltering for many additional years beyond the life of the original IRA owner.

At the same time, the U.S. Senate is debating provisions of similar legislation called the Retirement Enhancement and Savings Act (RESA), which would help small businesses by allowing them to:

  • Form multiple employer plans (MEPs) to reduce participant costs
  • Offer more lifetime income (annuity) options in retirement plans
  • Allow older workers to continue to contribute to IRAs past age 70 ½

Both SECURE and RESA enjoy broad bipartisan support, which bodes well for a final Congressional bill with favorable retirement-related aspects for many investors. We will keep an eye on this topic and let you know what might emerge when the policymaking dust settles.