The Senate Treasury Committee passed a bill Wednesday that would raise the age requirement for minimum distributions from retirement accounts to 75, along with other provisions designed to boost American retirement security.
The Enhancing American Retirement Now (EARN) law is halfway through the Senate passage of SECURE Act 2.0, the pension law passed by the House of Representatives in March. The other half, called the RISE & SHINE Act, walked out of the Senate Health, Education, Labor and Pensions Committee earlier this month. Part of the job of lawmakers now is to harmonize these versions and agree on a final version of what would become the second major retirement bill in less than three years, the successor to the SECURE law at the end of 2019.
The bill is unlikely to pass a vote in the Senate plenary, as there are relatively few legislative days left in the year for the already full agenda of the chamber, said Paul Richman, head of government and political affairs at the Insured Retirement Institute. Instead, the most likely way to vote is for members of the House and Senate committees to work behind the scenes to draft a bill that will be attached to another bill to be passed by the end of the year, such as a bill on spending.
“Now we have a framework for what could be included in the final bill,” Richman said. Although the vote is not guaranteed, strong bipartisan support for the legislation gives it a better chance of success, he noted.
Next, lawmakers must agree on the details. For example, EARN will increase the age for the required minimum distributions to 75, from the current 72, with effect after 2031, while the House version requires a more gradual approach that would raise the age to 75 by 2033.
The following are other key provisions contained in EARN:
Allowing employers to provide corresponding contributions to 401 (k) and other tax-preferred retirement plans for student loan payments of employees as if these payments were pension contributions, effective after 2023.
The requirement of additional contributions to an employer pension scheme for savers over the age of 50 to be paid as Roth contributions after tax, effective after 2023.
Allowing participants between the ages of 60 and 63 to contribute an additional $ 10,000 to additional contributions to 401 (k), inflation-driven, post-2024 programs.
Requirement of an employer under plan 401 (k) to allow part-time employees with at least 500 hours of service in two consecutive years to participate in the program, effective after 2022 (from three consecutive years as described in the Safe Act).
“There is nothing in there that is changing the earth, but there are these small changes that can have a gradual beneficial effect,” said Michael Kreps, co-chair of the retirement services team at Groom Law Group. “I think good government.”
Write to Elizabeth O’Brien at email@example.com