For retirement reform, the next stop is the Senate

Bill Cass, CFP®, CPWA®

Bill Cass, CFP®, CPWA®, 05/11/22


Following House passage of the bipartisan bill known as SECURE 2.0, the next step to advance this comprehensive retirement legislation will be in the Senate.

SECURE 2.0 (Securing a Strong Retirement Act of 2022) passed the House by an overwhelming majority in March 2022. The retirement reform bill aims to increase and preserve retirement savings through a variety of provisions, including expanded automatic enrollment, new incentives to save, and other enhancements to strengthen the nation’s retirement system.

The next step is for the Senate to consider the legislation.

Key differences between Senate and House versions

Last year, a bipartisan bill — the Retirement Security and Savings Act — was introduced in the Senate by senators Rob Portman (R-OH) and Ben Cardin (D-MD).

While this bill is very similar to the House-passed SECURE 2.0, some differences will need to be resolved before a bill can proceed and eventually be considered by both chambers of Congress.

Here are a few examples of how the current House and Senate bills differ:

Provision Senate and House versions
Auto-enrollment Unlike the House bill, the Senate proposal does not require certain new retirement plans to auto-enroll participants. Instead, the Senate version seeks to facilitate auto-enrollment and auto-escalation features by simplifying and clarifying rules and procedures.
Required minimum distributions (RMDs) The Senate bill includes a provision that suspends RMDs if an individual’s aggregate retirement account balance is less than $100,000. Both bills seek to raise the age for required distributions from age 72 to 75. However, the Senate bill would increase the age to 75 starting in 2032 while the House version would do so gradually over several years, finally reaching age 75 beginning in 2033.
Catch-up contributions The Senate bill increases catch-up contributions (to $10,000 for 401(k) plans, $5,000 for SIMPLE IRAs) once the individual reaches age 60. The House bill provides for increased catch-up contributions at ages 62, 63, and 64 only.
Changes to Roth accounts The Senate bill would allow Roth accounts within SIMPLE IRAs (but would not also extend this to SEP IRAs as the House bill does). Unlike the House bill, the Senate bill would not require catch-up contributions to be made into designated Roth accounts. It also does not allow plan participants the option to receive matching employer contributions in Roth accounts. Lastly, the Senate version would reconcile Roth distribution rules from plan accounts with IRAs, so RMDs would no longer be required from designated Roth accounts held within retirement plans.
Qualified charitable distributions (QCDs) Unlike the House bill, the Senate version would extend QCDs to SEP IRAs, SIMPLE IRAs, 403(b) accounts, and 457(b) accounts. However, it does not index the current limit ($100,000) for inflation. Additionally, unlike the House bill, there is no one-time option to direct $50,000 from an IRA tax free to a charitable gift annuity or trust.


Outlook for Senate action

The Senate has been holding hearings on retirement security, and the Finance Committee is expected to mark up its version in the next few weeks. Also, there have been bipartisan discussions among other lawmakers in the Senate on retirement-related proposals that could make their way into the broader discussion. If Senate lawmakers can agree on a bill, and if that bill can be reconciled with the House SECURE 2.0 bill, there’s a good chance that Congress can pass bipartisan retirement legislation later this year.

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