By Pension and Benefits Editorial Staff
The House on May 23, 2019 approved a bipartisan retirement savings bill that modifies the requirements for employer-provided retirement plans, individual retirement accounts (IRAs), and other tax-favored savings accounts. The measure entitled, Setting Every Community Up for Retirement Enhancement (SECURE) [Bill] of 2019 (H.R. 1994), cleared the House by a vote of 417 to 3.
Originally, HR 1994 was expected on Capitol Hill to quickly move through the Senate before Congress recessed on May 24 for its Memorial Day break. However, Sen. Ted Cruz (R-TX) reportedly communicated to lawmakers that because of a Democratic-led last minute change to the bill, he would block unanimous consent, which was required at that time to fast-track Senate consideration and approval of the measure.
The SECURE Bill closely resembles the Senate’s bipartisan Retirement Enhancement and Savings Bill, known as RESA.
As we go to press, the fate of the measure is uncertain.
With respect to employer-provided retirement plans, the bill modifies requirements regarding:
- The increase of the automatic enrollment safe harbor cap and simplification of the nonelective contribution 401(k) safe harbor;
- The increase of the credit limit for small employer plan start-up costs and creation of a tax credit for small employers that establish 401(k) plans and SIMPLE IRA plans with automatic enrollment;
- The repeal of the maximum age for traditional IRA contributions;
- The prohibition of loans made through credit cards by qualified employer plans;
- The portability of lifetime income options;
- The distribution of individual custodial accounts in kind upon termination of 403(b) plans;
- The clarification of individuals covered by retirement plans relating to church-controlled organizations;
- The expansion of eligibility for certain long-term, part-time employees to participate in 401(k) plans;
- The increase in age for beginning date for required minimum distributions from 70 Â½ to 72;
- The treatment of plans adopted by filing due date for the tax year as being in effect as of the last day of the tax year;
- The filing of a consolidated Form 5500 for certain similar defined contribution plans;
- The increase of penalties for failures to file retirement plan returns;
- The disclosure in benefit statements to defined contribution plan participants concerning lifetime income
- The provision for a fiduciary safe harbor for the selection of lifetime income providers;
- The modification of nondiscrimination rules to permit existing participants in closed plans to continue to accrue benefits; and
- The extension of the required distribution deadline for certain beneficiaries of defined contribution plans and IRAs to the end of the tenth calendar year following the year of the employee’s or IRA owner’s death.
The bill also includes provisions that:
- treat taxable non-tuition fellowship and stipend payments as compensation for IRA contribution purposes,
- allow penalty-free withdrawals from retirement plans when a child is born or adopted,
- treat difficulty of care payments to home healthcare workers as compensation for determining contribution limits for retirement accounts, and
- provide funding relief for community newspaper pension plans.
SOURCE: Setting Every Community Up for Retirement Enhancement (SECURE) [Bill] of 2019 (H.R. 1994).
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