Archived Insight | April 11, 2022

SECURE 2.0 Retirement Reform: House Passes Bipartisan Bill

The House of Representatives has passed a large, bipartisan bill (HR 2594), Securing a Strong Retirement Act of 2022, that would encourage savings and simplify the pension system. It’s the next step in the bipartisan effort to build on the SECURE Act Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act). Consequently, it’s commonly referred to as “SECURE 2.0.”

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There are more than 50 provisions in the bill. Some would provide tax credits to encourage participants to save and to encourage small employers to establish plans. Others would make significant changes in the system.

A very abbreviated list of the reform provisions that make significant changes in the system includes the following:

  • Allowing employer matching contributions when employees repay student loans
  • Establishing a retirement lost-and-found register at the DOL to allow participants to find out the current administrator of merged plans and defunct employers
  • Requiring new 401(k) plans to automatically enroll participants
  • Increasing the catch-up contributions that older participants can make
  • Gradually increasing the age when required minimum distributions must begin (currently 72) to 75 by 2033
  • Improving the IRS corrections program, Employee Plans Compliance Resolution System (EPCRS), to allow self-correction of most inadvertent errors
  • Providing additional ways under EPCRS of correcting overpayments and limiting recoupments
  • Increasing the mandatory distribution limit from $5,000 to $7,000
  • Introducing a middle ground between providing paper statements and electronic statements to participants
  • Allowing 403(b) custodial accounts to invest in collective trusts

The bill would generally delay amendments until 2024. The delay would be until 2026 for government plans and certain provisions affecting collectively bargained plans. It would also delay the amendment dates that were in the SECURE Act and the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) to coordinate them with the amendment dates for SECURE 2.0.

What’s next?

SECURE 2.0 still has a long path before it becomes law, and all parties expect changes and additional provisions when the Senate Finance Committee and the Senate HELP Committee each take up their separate versions of SECURE 2.0.

As SECURE 2.0 gets considered in the Senate and then reconciled with the House-passed version, there will be additional provisions and likely refinement of the House-passed provisions.

While both Senate Committees are expected to act over the summer, it is likely to be November or December (in the “lame-duck” session after the November elections) before all the expected conflicts in the different versions are resolved and a final bill can be considered. Any enacted bill is expected to be bipartisan.

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This page is for informational purposes only and does not constitute legal, tax or investment advice. You are encouraged to discuss the issues raised here with your legal, tax and other advisors before determining how the issues apply to your specific situations.