New retirement legislation could pass before new Congress

SECURE 2.0 has a chance to pass before the winners of the upcoming midterm elections take office in January

The Securing a Strong Retirement Act of 2022 (SECURE 2.0) could be passed by the current Congress in a “lame duck session” prior to the winners of next week’s midterm elections taking office, according to an analysis at retirement publication Pensions & Investments.

With Republicans currently favored to make gains in the upcoming elections and potentially swaying the balance of power in Washington D.C., the current Democratic majorities in both the U.S. House of Representatives and the U.S. Senate may try to push through as many of its legislative priorities as possible, including the new retirement legislation.

“The biggest variable in my mind is not, ‘Can they find agreement on the substance of SECURE 2.0?’ but rather whether there will be a vehicle to attach it to,” Kent Mason, a Washington-based partner with law firm Davis & Harman LLP, told Pensions & Investments. “If we know there’s a vehicle to attach it to, my confidence would go way up.”

For employers, the passage of the bill has the potential to reduce their costs and administrative burdens by providing a larger tax credit for small businesses, streamlining certain administrative requirements, and consolidate multiple notices into a single document.

The bill will also have the potential to increase the enrollment of more workers into active retirement plans, which could have a major impact on their ability to save money for later life, with 401(k) and 403(b) plans being impacted.

The Bipartisan Policy Center (BPC) took a closer look at some of the provisions found in SECURE 2.0 recently, saying in part that increasing the use of automatic enrollment and automatic escalation would “amplify the benefits of expanding access to retirement plans,” BPC said in September.

“Notably, only the House version of SECURE 2.0 currently includes the most impactful of such provisions, requiring most new retirement plans to automatically enroll eligible participants and automatically increase contributions by one percentage point (up to 10% of wages) annually.”

However, another factor is the looming end of current government funding provisions. The current slate of funding is scheduled to run out on Dec. 16, and Congress will need to address that issue first in order to avoid at least a partial shutdown of the federal government.

Read the story at Pensions & Investments.

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