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Retirement Planning > Saving for Retirement

Second Senate Secure Act 2.0 Bill Sails Through Committee

By Melanie Waddell

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What You Need to Know

  • The bills from the HELP Committee and Finance Committee will be combined to make up the Senate’s Secure Act 2.0 package.
  • The EARN act would make it easier for workers to save for retirement while repaying student loans.
  • It contains provisions intended to make 401(k) rollovers easier and to give workers a way to pay for long-term care insurance.

The Senate Finance Committee passed by voice vote on Wednesday the Enhancing American Retirement Now (EARN) Act, bipartisan legislation that’s intended to be included in the Senate’s version of Secure Act 2.0.

The Senate Health, Education, Labor & Pensions Committee passed by voice vote on June 14 the Retirement Improvement and Savings Enhancement to Supplement Healthy Investments for the Nest Egg, or Rise & Shine Act.

The bills from the HELP Committee and Finance Committee will be combined to make up the Senate’s Secure Act 2.0 package.

The Senate bill will be reconciled with the House-passed Secure Act 2.0 legislation, which passed in March, before a final bill gets voted on by both chambers.

Senate Finance Committee Chairman Ron Wyden, D-Ore., said Wednesday during the bill’s markup that it includes more than 70 proposals “aimed at helping more Americans save — the culmination of months of collaboration between just about every member of the committee, Democrat and Republican.”

The need for reforms, Wyden said, “is even more urgent at a time when prices are rising and eating into family budgets. More Americans are now reporting that they expect they won’t have enough set aside to retire anytime soon, and the number of retirees who are going back to work is climbing.”

Wyden cited four provisions of the bill.

For the first time, he said, the Savers Tax Credit will be deposited directly into a worker’s IRA or 401(k) account, rather than lumped into any tax refund, and the saver’s credit will be fully refundable, “which means workers of modest incomes will get an additional boost to their savings they couldn’t get before.”

Under the EARN Act, people making student loan payments will qualify to participate in their employer’s retirement plan.

“While they’re paying down their loans, their employers will make contributions to begin building up their retirement accounts,” Wyden said.

The bill also will direct the Treasury Department “to come up with new standardized forms that retirement plans can use to make rollovers easier for workers,” Wyden said.

“Rollovers are how workers bring their savings along when they change jobs. Today that process is often a massive headache.”

The bill will also allow “all employers to allow workers to take distributions from their retirement accounts to pay for long-term care premiums,” Wyden said.

The distributions out of retirement accounts will still be taxable, but there will no longer be a 10% penalty, he said.

Wyden said during the markup that he would also work to see that an auto-enrollment provision, like the one passed in the House bill in late March, is included in a Senate bill.

Wayne Chopus, president and CEO of the Insured Retirement Institute, said Wednesday in a statement that with passage of the EARN Act out of committee, “we have strong bipartisan momentum to address the anxiety and insecurity that many workers and retirees have about their ability to accumulate sufficient savings to provide them with sustainable income during their retirement years.”

IRI, Chopus said, “looks forward to working with the House and Senate to finalize a comprehensive bill that will put individuals on a path toward a secure and dignified retirement. We will advocate to expand the reach and impact of the final legislation to ensure there are more opportunities to offer protected lifetime income through workplace retirement plans.”

Melanie Waddell

@Think_MelanieW

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