House Passes SECURE Act; Makes it Easier for Small Businesses to Offer Retirement Plans

Massachusetts Representative Richard Neal, House Ways and Means Committee Chairman

 

The House has passed the Setting Every Community Up for Retirement Enhancement (SECURE) Act (H.R. 1994) with a 417-3 vote. The bill, introduced by Massachusetts Representative Richard Neal, would make it easier for small businesses to band together to offer 401(k) plans and eliminate the maximum contribution age on traditional individual retirement accounts, which is currently 70.5.

Neal, chairman of the House Ways and Means Committee, said in a statement that the House has made “significant progress” in helping to ensure workers of all ages are able to save enough money for retirement.

“The legislation closes loopholes and makes it easier for small business employees, home care workers, and long-term part-time workers to save for retirement,” Neal said. “I’m also proud that we were able to incorporate a much-needed fix to reverse unfair and unexpected high taxes on Gold Star families, low-income scholarship recipients, and children of fallen first responders, among others.”

Neal, who has previously spoken of how half of American workers are not enrolled in any retirement savings plan, has promised that more retirement savings legislation will follow, including legislation to help retirees in troubled multiemployer pension plans, which face steep cash shortfalls, and a measure to require businesses to automatically enroll their workers in savings plans unless they opt out.

The SECURE Act’s co-sponsors include Massachusetts Representatives Lori Trahan and Joe Kennedy, and New Jersey Representatives Bill Pascrell, Jr., Jefferson Van Drew, Andy Kim and Josh Gottheimer. Other lawmakers supported the bill as part of a broader effort at doing something about the lack of retirement savings by many Americans.

The SECURE Act would:

  • Make it easier for small businesses to band together to offer 401(k) plans
  • Require businesses to let long-term, part-time workers become eligible for retirement benefits and repealing the maximum age for making contributions to traditional individual retirement accounts
  • Make the age when required minimum distributions, or RMDs, from certain retirement accounts start to age 72, from 70.5, along with making changes to allow more annuities to be offered in 401(k) plans.

A provision that would have allowed money from tax-advantaged 529 education savings plans to be used for home-schooling expenses was removed from the bill.

The legislation now heads to the Senate, where a similar bill, known as the Retirement Enhancement Savings Act, or RESA, has yet to be voted out of committee.

In other activity, the Association, based on input from Massachusetts credit unions, has supported other related retirement enhancement legislation proposed by Congressman Neal such as his auto IRA legislation. Both the Association and Congressman Neal share his priority interest as Chairman of the House Ways and Means Committee to promote as many reasonable tools for retirement savings options for consumers as possible. A similar auto IRA measure in the Senate, sponsored by Rhode Island Senator Sheldon Whitehouse, was also supported by the Association at the direction of local credit unions in Rhode Island. 

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