Senate Revives Bill to Raise RMD Age, Boost Income Annuities
The reintroduced Retirement Security & Savings Act will likely be rolled into the Secure Act 2.0, which passed a House panel in early May.
Two senators have tossed another bill into the river of retirement legislation flowing into the Senate Finance Committee and the House Ways and Means Committee.
Sens. Ben Cardin, D-Md., and Rob Portman, R-Ohio, last week reintroduced S. 1770, the Retirement Security & Savings Act, which includes a few new provisions.
The Portman-Cardin legislation will likely get rolled into the Secure Act 2.0, officially called the Securing a Strong Retirement Act of 2021, which was approved by a House panel in early May and is widely expected to pass the full House.
“The bills we have seen introduced in the past weeks demonstrate that momentum is building for the enactment of another comprehensive bipartisan retirement bill,” Paul Richman, chief government and political affairs officer for the Insured Retirement Institute, told ThinkAdvisor Monday in an email. “We believe these bills form a strong foundation to help America’s workers and retirees build economic equity, strengthen their financial security, and protect their income to sustain them throughout their retirement years.”
“The Portman-Cardin bill plus the Grassley-Hassan-Lankford bill [ Improving Access to Retirement Savings Act] comes close to the Neal-Brady [Secure Act 2.0] bill so there’s lots to work with,” an IRI spokesperson added.
Key provisions in the bill would:
- Increase the required minimum distribution age, or age when retirement account users have to begin taking out cash, to 75, from 72, by 2032.
- Let nonprofit employers’ 457 defined contribution retirement plans, as well as nonprofit employers’ 403(b) tax-sheltered annuity plans, into the multiple employer plans, or MEPs, that were created by the Secure Act.
- Make it easier for people to use “qualified longevity annuity contracts,” or deferred income annuities designed to meet government standards, to provide guaranteed streams of lifetime income once they are very old, by, for example, increasing the dollar limitation on QLAC premiums to $200,000, from $125,000.
- Help employees find lost retirement accounts by creating a national, online database of lost accounts.
- Create a new, three-year, $500-per-year tax credit tax credit for small businesses that automatically re-enroll plan participants into an employer-sponsored defined contribution retirement plan at least once every three years.
- Enable employers to put matching contributions into workers’ 401(k) plan accounts or other defined contribution retirement plan accounts when the workers make student loan payments, as well as when the workers make contributions to the plans.
The bill is under the jurisdiction of the Senate Finance Committee.
It will, for example, compete with S. 1703, the “Improving Access to Retirement Savings Act.” That bill would let 403(b) plans, but not 457 plans, into MEPs.
AARP is an example of consumer group supporting the bill.
The list of insurers and mutual fund companies backing the bill includes Edward Jones, Empower Retirement, Fidelity, LPL Financial, Nationwide, State Street Corp., TIAA, T. Rowe Price, Transamerica and Vanguard.
The American Benefits Council, the American Council of Life Insurers, the Committee of Annuity Issuers, the Insured Retirement Institute, the National Association of Fixed Annuities and SPARK Institute are some of the industry groups on the supporter list.
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