On May 23, the U.S. House of Representatives will take up a bipartisan bill—approved unanimously on April 2 by the House Ways & Means Committee—that would expand employer-based retirement options.  The Setting Every Community Up for Retirement Enhancement (SECURE) Act (HR 1994) would make it easier for small businesses to join together and create multiple-employer retirement plans, thereby reducing costs and administrative burdens—and, to encourage employee participation, would give tax credits for new and existing plans that include an auto-enrollment feature.

HR 1994 would increase the minimum age for required distributions (from 70.5 to 72) and the maximum age at which an employee could contribute to his/her traditional IRA (also from age 70.5 to age 72).  The legislation would require that benefit statements—similar to Social Security statements—include projections of lifetime income.  And, the bill would make lifetime investment products portable for workers who change plans.

The SECURE Act would allow an individual to withdraw, without penalty, up to $5,000 upon the “qualified birth or adoption” of a child; allow long-time employees who work between 500 and 1,000 hours per year (i.e., part time) to now participate in retirement plans; and create a “fiduciary safe harbor” for employers who include annuities among their plans’ investments.

Specifically, the “safe harbor” would protect plan sponsors when they select lifetime-income providers to participate in the plan, which otherwise is a fiduciary act under ERISA.  Plan sponsors also would be protected from liability for any losses that a participant or beneficiary incurs if the insurer, at some point in the future, cannot satisfy its financial obligations under the contract.

To help pay for itself, HR 1994 would increase certain filing penalties and would require most people who inherit individual retirement accounts to take distributions within 10, rather than five, years.

Further information is available HERE.