Senate Finance Committee Chairman Orrin Hatch, R-Utah, and Ranking Member Ron Wyden, D-Ore., reintroduced on Thursday S. 2526, the Retirement Enhancement and Savings Act of 2018, which authorizes multi-employer pension plans as well as other savings mechanisms like allowing seniors older than 70 to make tax-free contributions to their IRA, and retirement incentives for graduate students.
A similar version of the bill was first introduced in 2016 and passed the Senate Finance Committee.
“Authorizing multiple-employer plans would let smaller employers join together to sponsor one retirement plan for their workers, making it more feasible for businesses of all sizes to offer retirement plans and increasing access for millions of Americans wishing to save for retirement,” Hatch said in a statement.
“Working Americans are struggling to set money aside for retirement,” Wyden added. “This bipartisan bill gives employers incentives to make it easier for their employees to save.”
The bill makes multiple employer plans, or MEPs, more attractive by eliminating barriers to the use of MEPs and improving the quality of MEP service providers.
Senate Majority Leader Mitch McConnell announced in late February that Hatch will co-chair a bipartisan, bicameral Joint Select Committee on the Solvency of Multiemployer Pension Plans.
Dirk Kempthorne, president and CEO of the American Council of Life Insurers, applauded the bill for providing access to lifetime income solutions, like annuities, that will help turn peoples’ savings “into a ‘personal pension.’”
The Insured Retirement Institute applauded the bill for helping savers make more-informed decisions about their finances by “providing lifetime income estimates on benefit statements.”
The bill also includes a provision that creates a new tax credit of up to $500 per year to employers to defray startup costs for new 401(k) plans and SIMPLE IRA plans that include automatic enrollment. The credit is in addition to the plan startup credit allowed under present law and would be available for three years.
Another section of the bill 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 explains.
The legislation “removes this obstacle to retirement savings by taking such amounts that are [allowable] 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.”
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