Sri Reddy, a top retirement services executive, says a major retirement bill may be heading into slow water in Washington.
Reddy says he’s hoping congressional leaders will attach the text of the Setting Every Community Up for Retirement Enhancement (Secure) Act of 2019 bill to some other, must-pass legislation, and use that other, must-pass legislation to pull the bill through the Senate.
Reddy talks about his views in a new written commentary on the state of federal retirement policy.
Reddy is a senior vice president at Principal. He’s also the chairman of the Advisory Council on Employee Welfare and Pension Benefit Plan, which is also known as the ERISA Advisory Council. The council advises the U.S. secretary of Labor on matters related to the Employee Retirement Income Security Act of 1974 (ERISA).
For Reddy and many colleagues in the life insurance industry, one of the top priorities has been to push for passage of the Secure Act bill or a similar bill.
In May, the Secure Act bill looked as if it was gliding to passage.
People in Washington still seem to be making progress on efforts to increase workers’ participation in retirement plans, especially at small and midsize employers, Reddy said.
“Although this progress is reassuring, optimism surrounding the Secure Act is now fading as the Senate majority leadership focuses on other priorities prior to the August recess,” Reddy said.
The Secure Act
The Secure Act bill would help insurers offer small employers access to multiple employer defined contribution retirement plans, or multiple employer plans (MEPs).
The bill also includes a safe harbor provision that could make employers feel more comfortable about adding lifetime income options to 401(k) plans and similar plans. The provision would shield employers against lawsuits if the annuitization provider turned out to perform poorly.
Drafters have proposed paying for part of the cost of the bill by changing the rules for stretch individual retirement accounts, or stretch IRAs. Some people use stretch IRAs to hold down taxes when one taxpayer dies and passes an IRA on to someone else.
The Wall Street Journal ran an editorial attacking the stretch IRA provision in July.
The House passed the bill by a 417-3 vote in May. The bill is now under consideration in the Senate.
— Read WSJ Editorial on Secure Act’s ‘Stretch IRA’ Provision Sparks Debate, on ThinkAdvisor.