The U.S. House of Representatives voted 414 – 5 to pass The Securing a Strong Retirement Act of 2022. The new legislation builds on the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019.

Key SECURE 2.0 proposals:

  • The expansion of auto-enrollment in 401(k) and 403(b) retirement plans (for plan years beginning after Dec. 31, 2023).
  • Increases the age for required minimum distributions (In 2019, the SECURE Act increased the age to 72. The SECURE 2.0 Act raises the age to 73 starting on Jan. 1, 2023. The minimum distributions age will go up to age 74 on Jan. 1, 2030, and 75 on Jan. 1, 2033).
  • Expands coverage for part-time workers in 401(k) plans. Secure 2.0 reduces the years of service requirements for long-term, part-time workers to participate (for plan years beginning after Dec. 31, 2022).
  • Increases the catch-up contributions for people 50 years and older (for taxable years beginning after Dec. 31, 2023).
  • Allows SIMPLE IRAs to accept Roth contributions (for tax years beginning after Dec. 31, 2022).
  • Treats student loan payments as elective deferrals for purposes of matching contributions (for plan years beginning after Dec. 31, 2022).
  • Modifies the credit for small employer pension plan startup costs (for taxable years beginning after Dec. 31, 2022).
  • Establishes a national, online Retirement Savings Lost & Found Database for workers and retirees to find their lost retirement accounts (no later than two years after enactment).

Retirement reform is likely to pass this year. There’s a lot of support for reforming the nation’s retirement system in the Senate. The houses legislations isn’t the only bill on the table. The Senate has been working on its retirement legislation. The Portman-Cardin bill the senate has been working on shares some features with the House bill.

Although the Senate bill shares much with the house bill, one notable exception is the auto-enrollment mandate in the house bill. The Senate has chosen to use the carrot rather than the stick to get employers to deploy auto-enrolment. The Senate approach incentivizes employers with tax credits rather than forces them with mandates and penalties.

Another notable difference in the bills is that, unlike the House bill, the Senate bill does not include a proposal to make up any of the lost tax revenue that will result from the changes to the retirement system.

We can’t be sure what the final legislation will look like, but we will likely see changes to the 401k program later this year. To stay up to date with the latest employer news, signup for the XcelHR monthly newsletter.