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Retirement Planning > Retirement Investing

McConnell Pushes for Immediate Secure Act Vote

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Welcome back to Human Capital! I’m Melanie Waddell in Washington. We start this edition with some breaking news.

Late Tuesday, McConnell, R-Ky., put forth a “hotline” unanimous consent vote request on the Setting Every Community Up for Retirement Enhancement (Secure) Act, which the Senate may consider Wednesday.

Earlier on Tuesday, nearly 90 company and trade group CEOs — including the Insured Retirement Institute, the National Association of Insurance and Financial Advisors and nonprofits — pressed McConnell and Senate Minority Leader Chuck Schumer, D-N.Y., in a letter to ensure quick action on the Secure Act.

Schumer argued Tuesday that the Secure Act was part of McConnell’s “legislative graveyard” of nearly 250 bills with bipartisan support that McConnell refused to take action on. Other bills on the “graveyard” list were S.2598, the Pension Stability Act, and S.2254, the Butch Lewis Act, bills to protect workers’ and retirees’ pensions.

McConnell’s previous motion on Oct. 25 for a unanimous consent vote on the Secure Act was not acted on by the Senate.

Don’t forget to listen in on episode #3 of the Human Capital podcast, which spotlights Norm Champ, a former director of the SEC’s Division of Investment Management on his financial literacy efforts and more.

2 Options for Passage

In play Wednesday: a unanimous consent request for a limited time agreement and a limited list of five amendments related to the Secure Act, including the controversial provisions allowing 529 plan funds to be used for homeschooling as well as apprenticeship programs.

The other option: There’s “bipartisan, bicameral support for attaching Secure” to a must-pass bill, specifically a spending bill, but Congress “is more likely to go with a continuing resolution” to fund the government through the end of the year, says Judi Carsrud, NAIFA’s assistant vice president for government relations.

The CR “is far less likely to have any attachments, because Congress likes ‘clean’ CRs to avoid the politics of which bills it could or should attach,” Carsrud says.

There’s likely “a little less than 50/50” chance that Secure Act passes this year, Brad Campbell, former head of the Labor Department’s Employee Benefits Security Administration, said on a recent call. Passage is “certainly a possibility, and it’s something there’s a lot of people working to try to get the Senate to make some forward progress on.”

If the Secure Act is going to get passed, “it probably needs to happen this year,” said Campbell, who’s now a partner at Drinker Biddle in Washington, given that “next year becomes more and more about the [presidential] election and that kind of fighting.”

But whatever happens, the bill’s “concepts … have gotten bipartisan approval, so they’re going to hang around,” Campbell opined.

The bill’s package of retirement-related tax provisions increases the auto-escalations safe harbor to 15%, changes the required minimum distribution age to 72, gets rid of the age limit for contributions to IRAs, and puts in place a safe harbor for selecting an annuity provider for workplace retirement plans.

A couple of Secure Act provisions “have raised some eyebrows,” according to Campbell, including one that says that employees who work 500 or more hours for a company in three consecutive years are eligible to join its retirement plan. “That’s raised some questions about compliance and other issues.”

If there’s another tax bill next year, and “if there is another opportunity after the presidential election and the next congressional election and the next Congress, I think we’ll see these ideas [in Secure] stay and some of them will make it through; the question is what’s the vehicle and what’s the timing?”

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