With unanimous passage of the Enhancing American Retirement Now (EARN) Act by the Senate Finance Committee last week, lawmakers and lobbyists have turned their attention to reconciling the legislation with the House bill, dubbed SECURE 2.0.
“We’re very optimistic that Congress is going to act on a SECURE 2.0 package this year,” Paul Richman, chief government and political affairs officer at the Insured Retirement Institute, a trade group for the annuities industry, said in an interview.
“From all our conversations with staff, they are all optimistic that they are going to get it done. We think Congress is going to act to provide common-sense solutions that address the anxiety we know many workers are feeling about their retirement security.” Richman said.
Both bills would raise the age at which taxpayers must start taking required minimum distributions (RMDs) from age 72 to 75, giving wealthier investors three extra years of tax-free growth.
The Senate version also modifies RMD rules to exempt certain annuity benefits and payments from the minimum income threshold test and updates the mortality tables to reflect longer life expectancies.
The legislation will also allow catch-up contributions of $10,000 annually between ages 60 and 63, to help baby boomers sock away adequate retirement nest eggs. The bill also directs the U.S. Department of Treasury to authorize yearly cost-of-living adjustments for contribution limits.
The bill will also allow employers to make matching contributions to the workplace retirement plans of employees based on the amount of student loan payments they’re making; facilitate the use of low-cost ETFs in variable annuities; enhance the workplace retirement plan tax credit to 75% of qualified startup costs and extend it to employers with 25 or fewer employees and authorize the formation of 403(b) pooled employer plans (PEPs) for nonprofits, public educational organizations and religious institutions.
Getting the legislation through conferencing and the Senate and to President Joe Biden’s desk so he can sign it into law, especially during an election year, will require coordination.
Richman said that while it is unlikely the bill can pass before the election, lawmakers and staff are determined to create a package in the Senate that can be attached to an omnibus spending bill by the end of the year—as the original SECURE Act was in 2019.
While lawmakers are on summer recess until July 8, “I understand they’re going to start working on it. I expect that to happen in the immediate future,” Richman said.