Congress is currently working on a bill designed to help savers of all ages: The Securing a Strong Retirement Act of 2021 will attempt to increase retirement savings and add to changes seen under the Setting Every Community Up for Retirement Enhancement Act of 2019, or SECURE Act.
This newest proposed legislation, nicknamed the SECURE Act 2.0, would require employers to automatically enroll eligible workers in 401(k) and 403(b) plans, and additionally increase contributions every year.
The current version of this bill has received bipartisan approval, and as the chairman of the House Ways and Means Committee has said, “We are now one step closer to improving Americans’ financial security.”
The SECURE Act 2.0 would introduce major changes as noted below:
- Expand automatic 401(k) and 403(b) enrollment
- Initial contribution would be 3% to 10% and would increase 1% every year unless a worker changes % or opts out.
- Raise the age for mandatory withdrawals
- The new age would be 73 starting January 1, 2022.
- Index the IRA catch-up contribution limit for inflation
- The bill would index the current $1,000 amount starting in 2023
- Increase catch-up contribution limits for some employees
- Employees aged 62-64, who have retirement plans, would raise contribution limit to $10,000.
- Enable matching retirement contributions for student loan payments
- Would allow employers to match a worker’s loan payment by making equivalent to the worker’s retirement plan.
- Reduce required minimum distribution penalties
- Currently, the penalty for not taking an RMD is 50% of the amount that was not taken on time. The bill would reduce the penalty to 25% and provide an opportunity to soften the penalty to 10%.
These changes would help workers prepare for retirement and would also help retirees hold on to more of their retirement savings.
What to Do Next
Our dedicated team of Employee Benefit Plan auditors receives specialized training to stay ahead of legislation like the SECURE Act 2.0 and identify ways your business might benefit. We perform more than 130 plan audits each year, and as independent benefit plan auditors and a Top 100 firm in the country providing this work, we focus on providing timely service, hitting your deadlines, and ensuring compliance.
Talk to a Barnes Dennig team member today about your audit needs and find out how our team provides a quality audit that meets the requirements of all regulatory agencies and provides peace of mind for your employees by showing them their assets are secure. And, if you’re getting ready for your first employee benefit plan audit – don’t miss this quick video primer from some of our top EBP audit professionals. Contact us – we’re here to help.