On May 23, the U.S. House of Representatives approved the Setting Every Community Up for Retirement (SECURE) Act (H.R. 1994) in a sweeping 417-3 vote.
This broad legislation incorporates many proposals from bi-partisan bills previously introduced but never passed by Congress. The Act is designed to make it easier for employers to offer retirement plans and for individuals to save for retirement.
What could this mean for your practice?
Some of the Act’s key provisions include:
- Creating a Pooled Employer Plan (PEP)—a more open form of Multiple Employer Plans (MEPs), which requires certain conditions be met for employers to band together to form a plan
- Increasing the tax credit for new plans from the current cap of $500 to $5000
- Extending the Required Minimum Distribution start date from 70 ½ to 72
- Simplifying the 401(k) safe harbor rules
- Allowing penalty-free distributions for new parents of up to $5,000 within a year (birth or adoption)
- Providing portability to lifetime income options
While this legislation is a very exciting development for the industry, there’s still a long way to go until it’s passed into law. The Senate must first vote on their own version of the SECURE Act—Retirement Enhancement and Savings Act (RESA). If passed, a committee will work to reconcile the differences between the House and Senate. The reconciled version will then go back to both the House and Senate to be passed again, and then the President must sign it into law.
Unfortunately, even bills with significant bi-partisan support are often derailed by the legislative process.
Curi Capital is closely watching developments around the Act and will continue to provide updates on what it means for retirement plan sponsors.
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