The Senate introduced bipartisan legislation, the Retirement Enhancement and Savings Act of 2016, which includes provisions to make multiple employer plans (MEPS) more appealing as well as allow individuals older than 70 ½ to continue contributing to IRAs.
The bill was reported out of the Senate Finance Committee on a bipartisan basis in September, along with the Miners Protection Act of 2016. The next step for the bills is a vote on the Senate floor, but such a vote is to be determined by the Senate Majority Leader.
In commenting on the legislation, Lynn Dudley, senior vice president, global retirement and compensation policy for the American Benefits Council, said that the lame-duck congressional session “presents lawmakers with an opportunity to advance several measures that would improve workers’ retirement security. We urge Congress to focus its energies on enactment of retirement policy reforms with broad bipartisan support.”
Senate Finance Committee Chairman Orrin Hatch, R-Utah, said the bills are the result of “bipartisan cooperation by members from both sides of the aisle that will assist employers, beneficiaries and hard-working Americans. … We now have a real opportunity to enact legislation that will allow open multiple employer plans for employees working for companies of all sizes, increasing access for a number Americans hoping to save for their future.”
The Retirement Enhancement Savings Act repeals the prohibition on contributions to a traditional IRA by an individual who has reached age 70½. As Americans live longer, an increasing number continue employment beyond traditional retirement age.
Another provision would treat certain taxable non-tuition fellowship and stipend payments as compensation for IRA purposes.Stipends and non-tuition fellowship payments received by graduate and postdoctoral students are not treated as compensation and cannot be used as the basis for IRA contributions, the bill says.
The legislation “removes this obstacle to retirement savings by taking such amounts that are includible in income into account for IRA contribution purposes. The change will enable these students to begin saving for retirement and accumulate tax-favored retirement savings.”