Law Securing a Strong Retirement Act 2.0: Signed into Law 12/30/22

[Lead]

Final Post 1/2/23
Late post but Biden signed the omnibus bill into law a couple days back. With that, we will have this revamp of retirement savings tax changes which have been something in process for the last 3-4 years. It's likely we will see very little in revised tax provisions until 2025 when most of the big ones are on the table for renewal, making the 2024 election key.

Biden signs $1.7 trillion spending bill, avoiding a partial government shutdown

Updated Post 12/20/22
This is confirmed to be in the Omnibus bill. Like ECA reform, it will require another vote in the House but they will need to vote on the omnibus anyways.

Here’s what’s in the $1.7 trillion federal spending bill
CNN

Enhance retirement savings: The bill contains new retirement rules that could make it easier for Americans to accumulate retirement savings – and less costly to withdraw them. Among other things, the provisions would allow penalty-free withdrawals for some emergency expenses, let employers offer matching retirement contributions for a worker’s student loan payments and increase how much older workers may save in employer retirement plans.

Its worth noting too the cost of this portion of the omnibus. The House version showed over a 10-year projection something like 1.2B in new revenue and 1.1B in lost revenue so around 158M net additional revenue. The Senate did add additional provisions and it wasn't evaluated by the CBO like the house version was so that 158M could be different at this point.

Updated Post 11/21/22
Another bill to watch the remaining part of the congressional term is the Securing a Strong Retirement Act of 2022. As mentioned earlier, it passed the House earlier this year but the Senate has still been working on their versions (AKA Earn Act). If they don’t come to a resolution and pass this before end of term, we will need another vote on the the House bill. It passed easily in the House so that might not be a huge issue but would save floor time if they could address it now.

For retirement-system changes proposed in Congress via ‘Secure 2.0,’ December is do-or-die time
CNBC

For supporters of congressional proposals to improve the U.S. retirement system, it’s about to be a nail-biting few weeks.

Lawmakers are heading back to Washington next week to finish out the so-called lame-duck session — the legislative period between the midterm elections and the new Congress, which starts Jan. 3. While no specific agenda has been released yet, supporters of the retirement-change proposals collectively called “Secure 2.0” are hopeful that it will be among the pieces of legislation that make it across the finish line.

Updated Post 6/1/22
Not a significant update but the Senate's version of this bill is being drafted and aligning pretty closely to the already passed House bill. Still unsure on when we could see a vote in the Senate but more progress being made:
Senate releases draft retirement savings legislation in line with Secure Act 2.0
Market Watch

The Senate has its eye on bolstering retirement savings, months after the House approved the Secure Act 2.0.

The Senate Health, Education, Labor and Pensions Committee, also known as HELP, released a legislative draft that would encourage Americans to save more in emergency and retirement accounts as well as gain more widespread access to employer-sponsored accounts if they don’t already have one. The proposal is called the Retirement Improvement and Savings Enhancement to Supplement Healthy Investments for the Nest Egg Act, otherwise known as the RISE and SHINE Act.

“The COVID-19 pandemic was exactly the kind of crisis millions of families simply could not afford,” Senator Patty Murray, the HELP Committee Chair, said in a statement. “And this crisis has been even harder on the countless people who have never had access to a retirement plan, and have never even been paid enough to make ends meet – let alone save for their futures.” Murray, a Democrat from Washington state, and Ranking Member Senator Richard Burr, a Republican from North Carolina, released the draft on Thursday.

Updated Post 3/30/22
Passed the house today 414-5. Unsure how quickly the senate will take it up but some expected this could stall until 2023 for other agenda in Congress.

Original Post 5/10/21
This looks like a good bill to be following. Hasn't had a vote in the House or Senate yet but from what's I've read, it looks like it has a strong chance of passing. This bill is sponsored by House Reps Richard Neal (D-Mass) and Kevin Brady (R-Texas) and builds upon the initial Secure Act of 2019.

H.R.2954 - Securing a Strong Retirement Act of 2021

Some key takeaways from the proposed bill:
-Delays the age of required minimum distributions
-Decreases the RMD penalty by half (50% to 25%)
-Expands the catch up 401k 403b SIMPLE contribution limit for ages 62-64
-IRA Catch ups will be indexed to inflation going forward
-Requires automatic 401k enrollment with employers unless the employee chooses to opt out
-Employers can provide a 401k match contribution for employee's student loan payment

Really seems to cover all the generational bases here by tackling RMD changes and the student debt payment match piece is a great idea imo.

Further Reading
House committee to consider ‘Secure 2.0’ retirement bill this week. Here’s what’s in it by CNBC
4 Ways The Secure Act 2.0 Would Change Retirement Planning by Forbes
Secure Act 2.0: A Gateway to ‘Rothification’ of Retirement? by ThinkAdvisor

 

[cincymma79]

I'll have to read up more later but sounds ok

 

[caitlyngender]

Get rid of the damn 10% penalty so we can go buy ammo with our 401(k)s for fuck's sake

 

[Lead]

Get rid of the damn 10% penalty so we can go buy ammo with our 401(k)s for fuck's sake

I don’t think they will do something like that. These measures are meant to incentivize people to save more for retirement, not to take money out of what they saved for other expenses

 

[caitlyngender]

I don’t think they will do something like that. These measures are meant to incentivize people to save more for retirement, not to take money out of what they saved for other expenses

They did it in 2020 and still have us fucked over in many of the same ways, so it is appropriate.

You would have to be completely in the dark if you think a “retirement” with the US fiat currency is a viable option.

 

[panamaican]

The 401(k) match for student loan payments is a very good idea.

 

[Lead]

The 401(k) match for student loan payments is a very good idea.

Yep, makes complete sense as the person may have to address their net worth on the debt side initially and I don’t see good reason to not give access to an employer matching that too.

 

[Hadron90]

Companies will have to opt to do that 401(k) student loan match, right? It won't just be a blanket policy applied to every 401(k).

 

[panamaican]

Companies will have to opt to do that 401(k) student loan match, right? It won't just be a blanket policy applied to every 401(k).

Based on the other 401(k) point, that enrollment is automatic and employees have to opt out, I doubt that will give the companies the option to opt out. Blanket policy makes the most sense based on everything else they're doing.

The engagement issue will more likely be in employees appropriately communicating those payments to their employer within whatever is considered a timely fashion.

 

[panamaican]

Yep, makes complete sense as the person may have to address their net worth on the debt side initially and I don’t see good reason to not give access to an employer matching that too.

Absolutely, especially since most people won't have enough in their 401(k)s to handle retirement based on current trends. Eliminating the double whammy effect of student debt payments on long term retirement opportunities is a very important thing to do.

 

[Lead]

This bill has stalled since being approved unanimously by the House Ways and Means committee but looks to be approaching a vote sometime this week. Should be one of the key bills this year if passed.

 

[Lead]

Passed the house today 414-5. Unsure how quickly the senate will take it up but some expected this could stall until 2023 for other agenda in Congress.

 

[Lead]

Not a significant update but the Senate's version of this bill is being drafted and aligning pretty closely to the already passed House bill. Still unsure on when we could see a vote in the Senate but more progress being made:
Senate releases draft retirement savings legislation in line with Secure Act 2.0
Market Watch

The Senate has its eye on bolstering retirement savings, months after the House approved the Secure Act 2.0.

The Senate Health, Education, Labor and Pensions Committee, also known as HELP, released a legislative draft that would encourage Americans to save more in emergency and retirement accounts as well as gain more widespread access to employer-sponsored accounts if they don’t already have one. The proposal is called the Retirement Improvement and Savings Enhancement to Supplement Healthy Investments for the Nest Egg Act, otherwise known as the RISE and SHINE Act.

“The COVID-19 pandemic was exactly the kind of crisis millions of families simply could not afford,” Senator Patty Murray, the HELP Committee Chair, said in a statement. “And this crisis has been even harder on the countless people who have never had access to a retirement plan, and have never even been paid enough to make ends meet – let alone save for their futures.” Murray, a Democrat from Washington state, and Ranking Member Senator Richard Burr, a Republican from North Carolina, released the draft on Thursday.

 

[Lead]

Another bill to watch the remaining part of the congressional term is the Securing a Strong Retirement Act of 2022. As mentioned earlier, it passed the House earlier this year but the Senate has still been working on their versions (AKA Earn Act). If they don’t come to a resolution and pass this before end of term, we will need another vote on the the House bill. It passed easily in the House so that might not be a huge issue but would save floor time if they could address it now.

For retirement-system changes proposed in Congress via ‘Secure 2.0,’ December is do-or-die time
CNBC

For supporters of congressional proposals to improve the U.S. retirement system, it’s about to be a nail-biting few weeks.

Lawmakers are heading back to Washington next week to finish out the so-called lame-duck session — the legislative period between the midterm elections and the new Congress, which starts Jan. 3. While no specific agenda has been released yet, supporters of the retirement-change proposals collectively called “Secure 2.0” are hopeful that it will be among the pieces of legislation that make it across the finish line.

 

[COTUR1@43]

If I am reading this right, I don't like that they are changing the catch up contributions (50 or older) from tax-deferred to automatically Roth (after tax). They are just trying to capture more taxable income now. I would rather pump more in tax deferred and then if I have extra after tax income I can contribute to my Roth on my own...not forced to at a tax disadvantage.

 

[Lead]

This is confirmed to be in the Omnibus bill. Like ECA reform, it will require another vote in the House but they will need to vote on the omnibus anyways.

Here’s what’s in the $1.7 trillion federal spending bill
CNN

Enhance retirement savings: The bill contains new retirement rules that could make it easier for Americans to accumulate retirement savings – and less costly to withdraw them. Among other things, the provisions would allow penalty-free withdrawals for some emergency expenses, let employers offer matching retirement contributions for a worker’s student loan payments and increase how much older workers may save in employer retirement plans.

 

[Lead]

Its worth noting too the cost of this portion of the omnibus. The House version showed over a 10-year projection something like 1.2B in new revenue and 1.1B in lost revenue so around 158M net additional revenue. The Senate did add additional provisions and it wasn't evaluated by the CBO like the house version was so that 158M could be different at this point.

 

[Lead]

Late post but Biden signed the omnibus bill into law a couple days back. With that, we will have this revamp of retirement savings tax changes which have been something in process for the last 3-4 years. It's likely we will see very little in revised tax provisions until 2025 when most of the big ones are on the table for renewal, making the 2024 election key.

Biden signs $1.7 trillion spending bill, avoiding a partial government shutdown

 

[PainIsLIfe]

Haven't read the bill yet, but sounds like a bill that favors the upper class - a company can match your 401 for student loans (just another perk for corporate) and adjusting catch up contributions to after tax means that it's for people that can afford to take home less money (not your day to day blue collar worker).

I won't complain, but for the avg middle class or worse person, this bill doesn't really do a lot.

 

[Lead]

Haven't read the bill yet, but sounds like a bill that favors the upper class - a company can match your 401 for student loans (just another perk for corporate) and adjusting catch up contributions to after tax means that it's for people that can afford to take home less money (not your day to day blue collar worker).

I won't complain, but for the avg middle class or worse person, this bill doesn't really do a lot.

Retirement can be tricky as most of this is when it's taxed so it's giving more flexibility to wealthier people in how they manage their tax liability over the long term. The plan looks to net out to additional revenue so on some fronts there's expenditures and in other spots, it makes it back up in more revenues.

For the the student loan piece, I'd revise that to flexibility to corporations providing benefits to their employees. Under the current set up, if there's two employees where one is making a $500 student loan payment each month and the other isn't and is using it to fund his 401k, only one gets the match from their employer. This just allows each employee to receive a match for addressing their net worth in return for company match retirement contributions. I'm supportive of this compared to the mass forgiveness that is currently being looked at by the courts but the only reservation I might have is will this encourage the rate of tuitions to rise with the idea your future employer will just pay you something in proportional to loan payments. 401k plans have been good in the sense that they've made it that you need to give a similar benefit to the employees regardless of income. So the fact officers will want the program to help shield their own tax liability will also open an option to their poorer employees. I agree that doesn't help the most poor who aren't going to contribute at all but it has been a system which incentivized private corps to give middle class workers retirement options. Keep in mind a 401k is provided in many different setting and not just a white collar job. You can see it available with factory workers and more hands on work. With that said, I agree it might not be a very progressive bill but with net tax revenue, it seems like a win win for government and workers.