House Ways and Means Committee Chairman Richard Neal.
Matt Stone | Boston Herald | Getty Images
The House Ways and Means Committee is poised to consider a bill on Wednesday that would make changes to how U.S. workers save for retirement.
The measure, known as the Securing a Strong Retirement Act of 2021, comes less than a year and a half after another major retirement-savings bill, the Secure Act of 2019, was signed into law by then-President Donald Trump. Like that legislation, this new bill has bipartisan support: Its sponsors are Ways and Means Committee Chairman Richard Neal, D-Mass., and ranking member Kevin Brady, R-Texas.
“Retirement issues have a bipartisan legacy that continues with the Neal-Brady legislation,” said Wayne Chopus, president and CEO of the Insured Retirement Institute. “We are confident that Congress will act quickly to help more people build economic equity and strengthen financial security to sustain them throughout their retirement years.”
Among the provisions included in the new bill, which is similar to a version floated last year by Neal and Brady, is gradually increasing the age when individuals must begin taking required minimum distributions from their retirement accounts to age 75 from 72 (the Secure Act changed it to 72 from 70½) and requiring most companies that open a new 401(k) plan (or similar workplace option) to automatically enroll their employees.
“We’ve learned over time … that people who are auto-enrolled are much more likely to stay in the plan,” said Melissa Kahn, State Street’s managing director of retirement policy.
The bill also would index to inflation the “catch-up” contributions that individuals age 50 or older can make to their retirement accounts (an extra $6,500 for 401[k] plans and $1,000 for IRAs). And, it would increase those catchup amounts for individuals age 62 through 64, as well as allow workers to get 401(k) matching contributions (from employers) when they pay student-loan debt instead of contributing to their retirement savings account.
Additionally, certain restrictions on qualified longevity annuity contracts would be lifted. Right now, the maximum that can go into a QLAC is either $135,000 or 25% of the value of your retirement accounts, whichever is less. The bill would remove the 25% cap.
“You’re sort of limited today in terms of how much you can put in a QLAC,” Kahn said, adding that eliminating the cap would allow individuals who have high account balances to reach that $135,000 limit.
The new measure is expected to be voted on during the committee’s markup session on Wednesday, when amendments could be introduced and either adopted or killed. If the bill makes it out of committee, it would then be scheduled for a full House vote, although the timing of that is uncertain.