In my attempts to keep you informed about new things to help with your financial planning, I have been made aware that there is new legislation that is being proposed entitled the Securing a Strong Retirement Act of 2020 - some like to refer to it as Secure Act 2.0 since it builds on what was enacted in late 2019.
Some of the things the new legislation intends to provide are incentives for small businesses to offer plans, increase the RMD (required minimum distributions from IRAs) age to 75, and allow for bigger contributions under the catch-up provisions retirement plans and IRAs.
On Tuesday, Ways and Means Committee Chairman Richard Neal, D-Mass., and Ranking Member Kevin Brady, R-Texas, introduced the Securing a Strong Retirement Act of 2020, bipartisan (unheard of today) legislation they say will “help a greater number of Americans successfully save for a secure retirement".
“COVID-19 has only exacerbated our nation’s existing retirement crisis, further compromising Americans’ long-term financial security,” Neal said in a statement. “In addition to meeting workers’ and families’ most pressing, immediate needs, we must also take steps to ensure their well-being further down the road. With the Securing a Strong Retirement Act, Ranking Member Brady and I build on the landmark provisions in the SECURE Act and enable more workers to begin saving earlier – and saving more – for their futures. This bill will help Americans approach old age with the confidence and dignity they deserve after decades of hard work and sacrifice.”
“Ensuring Americans have the resources they need for a prosperous retirement is a bipartisan priority – and I’m glad that Chairman Neal and I were able to come together,” Rep. Brady said. “Our legislation will make it easier for folks to save, protect Americans’ retirement accounts, and give workers more peace of mind as they plan for the future.”
Key points of the act
- Promote savings earlier for retirement by enrolling employees automatically in their company’s 401(k) plan, when a new plan is created.
- Create a new financial incentive for small businesses to offer retirement plans.
- Increase and modernize the existing federal tax credit for contributions to a retirement plan or IRA (the Saver’s Credit).
- Expand retirement savings options for non-profit employees by allowing groups of non-profits to join together to offer retirement plans to their employees.
- Offer individuals 60 and older more flexibility to set aside savings as they approach retirement.
- Allow individuals to save for retirement longer by increasing the required minimum distribution age to 75.
- Allow individuals to pay down a student loan instead of contributing to a 401(k) plan and still receive an employer match in their retirement plan.
- Make it easier for military spouses who change jobs frequently to save for retirement.
- Allow individuals more flexibility to make gifts to charity through their IRAs.
- Allow taxpayers to avoid harsh penalties for inadvertent errors managing an IRA that can lead to a loss of retirement savings.
- Protect retirees who unknowingly receive retirement plan overpayments; and
- Make it easier for employees to find lost retirement accounts by creating a national, online, database of lost accounts.
As you have read, there are many new things that will come out of this if it is passed. I like what they have put together and it all makes sense. My personal opinion is that they are using this as a precursor, to at some point in the not too distant future, to start working on fixes to the social security system.
Note: this bill has not been voted on yet, however, I think it has a great chance of passing, potentially by the end of the year or early next year.
I'm sure that when these go into effect, there will be areas that we'll need to work on together. If you have any questions, please feel free to reach out to me at firstname.lastname@example.org with comments or questions.
* Source of information and pictures - 401k Specialist