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Everyone Loves the Big New Retirement Bills... But...

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Members of the House Ways and Means Committee voted unanimously Tuesday to pass H.R. 1994, the House version of the Setting Every Community Up for Retirement Enhancement Act of 2019.

House Ways and Means Committee Chairman Richard Neal, D-Mass., teamed up with Democratic and Republican colleagues — Rep. Ron Kind, D-Wis.; Rep. Kevin Brady, R-Texas; and Rep. Mike Kelly, R-Pa. — to introduce the House SECURE Act bill.

Over in the Senate, Sen. Chuck Grassley, R-Iowa, joined together with Sen. Ron Wyden of Oregon — a Democrat  — to roll out the Senate companion to the SECURE Act bill.

(Related: Sweeping Retirement Bill, Raising RMD Age, Unveiled by House Panel)

Given how popular the bills are, how is it possible they won’t pass sometime in the next three days?

One challenge could be money.

Members of Congress are supposed to try to keep most bills from increasing the federal budget deficit. In the past, many retirement savings bills with broad, bipartisan support have died after going through the federal budget analysis process, and fights over the budget cuts and revenue increases needed to offsets the retirement savings bills’ projected effects.

Here are five things to know about the SECURE Act legislation fight.

1. SECURE Act Legislation Basics

The SECURE Act bills would:

  • Create a safe harbor that employers could  use when they’re choosing group annuity issuers to support 401(k) plan lifetime income stream options.
  • Help a plan participant transfer a plan lifetime income feature from one plan to another employer-sponsored retirement plan, or to an individual retirement account (IRA).
  • Require plan sponsors to tell the participants about how much monthly retirement income their assets might produce.
  • Let people contribute to IRAs even if they are over age 70 1/2.
  • Provide a tax credit for a small employer that starts a new retirement plan with an automatic enrollment feature.
  • Allow small employers to participate in multiple employer defined contribution retirement plans, or MEPS.

2. The SECURE Act bills have a history.

Many provisions in the new SECURE Act bills come from the Family Savings Act bill, and some from the Retirement Enhancement and Savings Act bills.

The first RESA bill surfaced in Congress in 2016. In late, 2018, Congress appeared to be close to rushing another version of the RESA bill provisions to passage, as part of a must-pass spending bill.

The effort to pass the RESA provisions in 2018 fell through, partly because of concerns about how Congress would compensate for the effects of popular RESA provisions on federal tax revenue.

3. Life and annuity groups like the bills.

The Insured Retirement Institute and the American Council of Life Insurers have already been actively promoting the bill.

Susan Neely, the president of the ACLI, writes in a letter in support of the SECURE Act bill that the ACLI is leading “a broad coalition of industry leaders and retirement stakeholders who stand ready to assist and support your efforts to pass this important legislation.”

Action is especially important, given that 10,000 Americans turn 65 every day, and many will live 30 or more years in retirement, Neely writes.

4. ARPA may be coming, too.

The Association for Advanced Life Underwriting — AALU — is supporting the SECURE Act bill, just as it has supported the RESA bills in the past.

AALU is also joining the ACLI and other life and annuity groups in supporting another Neal retirement legislation project: the Automatic Retirement Plan Act, or ARPA.

The ARPA bill would require employers with more than 10 employees to offer a way for employees to contribute to a 401(k) plan or an individual retirement account through a payroll deduction mechanism. The bill would also provide plan startup tax credits.

Neal introduced an ARPA bill in 2017, and AALU says it expects him to reintroduce that bill this year.

5. The SECURE Act bills contain pay-fors.

For bipartisan retirement savings bills, the main obstacle to passage is usually finding ways to pay for bill tax breaks.

The current version of the SECURE Act bills include four pay-fors:

  1. A change in the required distribution rules for the beneficiaries of 401(k) plan participants who die. That provision could put retirement savers in opposition to the interests of the widows and orphans of workers who die young.
  2. An increase in the penalty for taxpayers who fail to file their taxes.
  3. An increase in the penalties for retirement plans that fail to file retirement plan returns.
  4. An increase in collection of heavy use vehicle excise taxes, by increasing information sharing between the Internal Revenue Service and U.S. Customs and Border Protection.

The heavy-use vehicle excise tax provision could add some suspense to the SECURE Act legislation fight.

That provision could put financial services and benefits groups in opposition to the interests of trucking groups, at a time when trucking groups are already facing headaches related to U.S. trade disputes with Canada and Mexico.

American Truck Dealers, a division of the National Automobile Dealers Association, has been fighting to kill the excise tax.


A summary of the new bill is available here.

The text of the House version of the bill is available here.

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