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December 17, 2019 at 01:23 PM
Members of Congress could approve a mammoth spending bill that includes a Secure Act section this week — and life and annuity groups are rejoicing.
The “Setting Every Community Up for Retirement Enhancement Act of 2019″ legislation could do everything from creating new and better tax credits for small employers that set up retirement plans, to providing some protection against lawsuits for employers who build annuitization options into 401(k) plans.
(Related: Congress Adds Secure Act to Year-End Spending Bill)
House leaders have put the Secure Act in Division O of H.R. 1865. H.R. 1865 is the wrapper for the “Further Consolidated Appropriations Act, 2020″ (FCAA 2020) bill.
Congress has to pass H.R. 1865, or some similar bill, this week to keep much of the federal government from shutting down Friday.
House leaders plan to bring H.R. 1865 to the House floor today.
Ted Godbout and Andrew Remo of the National Association of Plan Advisors say Senate leaders could bring the legislation to the Senate floor as early as Wednesday.
The History
Life and annuity groups have put every ounce of their lobbying strength into supporting the Secure Act, and they have teamed up with a coalition that includes a wide range of consumer and labor groups. Many of the groups’ members have flown into Washington to walk the halls of the U.S. Capitol and personally work to sell members of Congress on supporting the act.
Members of the House approved a stand-alone Secure Act bill by a 417-3 vote in May. The bill then stalled in the Senate, for reasons that were not publicly explained. Some life and annuity industry lobbyists suggested that the Secure Act bill could show up in a must-pass spending bill; other players seemed to be accepting the likelihood that they’d have to return to lobbying for passage of the bill in 2020 or later.
The Bill Basics
The Secure Act section in the FCAA 2020 legislation 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.
- Make use of the “stretch IRA” strategy for passing assets on to heirs less appealing.
The Reactions
Here’s what seven life and annuity policymaking players are saying about the news that the Secure Act is now back in the bill-passing mix.
1. Susan Neely, president of the American Council of Life Insurers
The Secure Act is the most sweeping retirement security legislation to move through Congress in more than a decade. It would mark a significant step toward modernizing America’s retirement system for workers.
Each day, 10,000 Americans turn age 65 and many can expect to live 20 years or longer in retirement. Yet, research shows that one-third of Americans approaching retirement have between nothing and $25,000 in savings to supplement Social Security income.
The Secure Act makes important changes that will go a long way toward addressing the nation’s looming retirement crisis. One provision alone will get more than 700,000 small business employees nationwide to start saving for retirement. Another will make it easier for employers to offer retirement plans with lifetime income options through annuities.
We applaud House and Senate leadership for their determination to pass this important legislation. By doing so, members of Congress can demonstrate bipartisan leadership in addressing critical needs of everyday Americans.
2. Wayne Chopus, president of the Insured Retirement Institute
We have a first down and goal on the 1-yard line. Congress and the President are about to deliver a meaningful, positive benefit to millions of American workers by expanding opportunities to save for and achieve a dignified retirement.
3. Marc Cadin, president of the Association for Advanced Life Underwriting
The Secure Act will help millions of Americans with their retirement. Time is the one critical element to effective savings that we never get back, and this bill will give people the ability to save more money, more efficiently. Thank you to the Secure Act’s steadfast champions in Congress and to the negotiators for prioritizing the financial security of the American people. AALU urges all members of Congress to vote yes on H.R. 1865 this week.
4. Kevin Mayeux, chief executive officer of the National Association of Insurance and Financial Advisors
The Secure Act is an important piece of legislation that helps small businesses provide robust benefits for their employees and gives Americans incentives to take responsibility for their retirement financial security. It makes a nice holiday gift from Congress to American employers and workers.
5. Brian Graff, chief executive officer of the American Retirement Association
The elements of this critical legislation have enjoyed bipartisan support in both houses of Congress, and for good reason. American workers are concerned about retirement, and this legislation will help expand access to these critical programs.
We very much appreciate the energy and thoughtful efforts of Congressional staff during the negotiations this past weekend,. We encourage the full House and Senate and President Trump to act quickly and help expand retirement plan coverage and support the retirement preparations of hard-working Americans with these common-sense reforms.
6. Graham Cox, head of MetLife’s Retirement & Income Solutions group
We commend Congress on the inclusion of the Setting Every Community Up for Retirement Enhancement (Secure) Act’s provisions in its appropriations package. This legislation removes the long-standing regulatory barriers that prevent companies from including lifetime-income options in their employees’ retirement plans.
MetLife is a strong supporter of these provisions and committed to ensuring that employees enjoy a secure retirement by having access to guaranteed income for life. Through the requirement that lifetime income estimates be included on annual defined contribution (DC) plan benefit statements, employees will gain a better understanding of how their savings translate into retirement income. The safe harbor provision, provided under the Secure Act, increases workers’ access to solutions that will protect against the risk of outliving their savings. Both of these provisions provide valuable tools that will strengthen retirement security for millions of Americans.
7. Phil Waldeck, chief executive officer of Prudential Financial’s Workplace Solutions Group
It looks as if Congress will take bipartisan action to pass the Secure Act before the holidays to help strengthen retirement security for millions of Americans.
The Secure Act is the most significant legislation aimed at bolstering America’s retirement system in more than a decade. It provides for much needed access to workplace retirement plans, improved retirement savings, and guaranteed retirement income that cannot be outlived.
Resources
A 1,773-page PDF version of H.R. 1865 that contains the text of the Secure Act, starting on page 1532, is available here.
— Read ACLI Defends Retirement Bill Against ‘Stretch IRA’ Attack, on ThinkAdvisor.
— Connect with ThinkAdvisor Life/Health on Facebook, LinkedIn and Twitter.
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