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What Is The Likely Impact of Emerging Legislation?

The alphabet soup of retirement-related legislative proposals, RESA, SECURE, and RSSA, introduced across both houses of Congress have much in common with few substantial differences.  All share the goal of increasing incentives to both offer and to participate in self-funded, private-sector retirement savings programs.  

With broad bi-partisan support, most Washington insiders predict new legislation will pass this year. 

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RESA

The Retirement Enhancement Savings Act of 2019 re-introduced in the Senate by Grassley and Wyden (originally introduced November 2016), if approved:

  • Would treat multiple employer plans (MEPs) as one plan under the Employee Retirement Income Security Act (ERISA) and address the “one bad apple” rule such that one participating employer’s mistakes or misdeeds would not disqualifying the whole plan.
  • Would require lifetime income estimates at least annually on participants’ retirement plan statements.
  • Would overcome a primary obstacle to plan sponsor adoption of in-plan lifetime income options by providing a fiduciary safe harbor for the selection of lifetime income providers for retirement plans.

RSSA

Introduced May 2019 by Rob Portman (R-OH) and Ben Cardin (D-MD), the Retirement Savings and Security Act of 2019 is bipartisan legislation is aimed at strengthening Americans’ retirement security. The measure includes more than 50 provisions to accomplish enhance self-directed retirement readiness.  The four major enhancements to the current retirement system covered by the proposal can be summarized:

  1. Allow people to set more aside for their retirement;
  2. Encourage small businesses to offer 401(k)s and other retirement plans
  3. Expand access to retirement savings plans for low-income Americans without coverage
  4. Provide more certainty and flexibility during Americans’ retirement years.

The SECURE Act

The Setting Every Community Up for Retirement Enhancement (SECURE) Act, passed the House of Representatives by a near-unanimous vote in late May.

The measure expands retirement saving options available to more Americans, including many part-time workers, and is very similar to Senate legislation under consideration, the Retirement Enhancement and Savings Act (RESA).

Each of these bills—which overlap considerably—

  • Extends traditional IRA contributions beyond age 70½ yrs.
  • Extends deadline for Required Minimum Deductions to age 72 yrs.
  • Allows Multiple Employer Plans or ‘Open MEPs’
  • Increased tax credits for new plan establishment
  • Tax incentives for adoption of auto-enrollment features
  • Annual lifetime income projection requirements
  • New safe harbor to promote the inclusion of lifetime income options

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