Back in March, A hearing was held by the Senate Health, Education, Labor, and Pensions Committee. Retirement professionals urged lawmakers to take action and increase the availability of workplace savings plans, and level some of the barriers that have kept workers from saving away more money for retirement.
“It is painfully clear we need to do more to strengthen people’s emergency savings and retirement security,” Sen. Patty Murray, chair of the HELP Committee, said at the hearing. Murray has said she is working with Richard Burr, the ranking Republican on the committee, to devise a plan that would address a number of retirement security challenges. So, for example, the creation of new emergency savings options to give savers a way to address urgent, unexpected needs.
The recent experience of the pandemic (especially the result it had on the economy) highlighted the need for emergency savings. Keeping separate funds stashed away from your retirement savings, specifically for unforeseen problems like the pandemic, is a challenge. Petros Koumantaros, a retirement professional who was present at the hearing, said something similar to this. “The Covid-19 pandemic illustrated how ill-equipped many Americans were to manage financial emergencies,” says Koumantaros.
Retirement security is a frequently discussed issue up on Capitol Hill. As a result, lawmakers have constantly been working to draft bills to advance the common goal of higher savings rates. The Securing a Strong Retirement Act is a product of that effort. This act promotes auto-enrollment in workplace retirement plans. Additionally, it offers tax breaks for small businesses so they can set up those plans. Also, it increases the RMD age for plan participants.
Some provisions of this act build upon the Secure Act of 2019, also designed to help small businesses in offering retirement plans. As a result, this act has been dubbed the “Secure Act 2.0.” “One of the primary impediments that small employers face in offering retirement benefits to their employees is the cost of starting and maintaining a plan in addition to managing it on an ongoing basis,” said Doug Chittenden, head of relationships at TIAA. Chittenden says “The ability to band together and share those costs across employers is, we think, a tremendous benefit and opportunity to increase participation.”
Retirement Plans Made Easier and More Accessible
So, the Secure Act 2.0, or Securing a Strong Retirement Act, has improved workplace retirement plans via:
- Increasing the age at which RMDs must begin
- The possibility for larger catch-up contributions to be made
- The expansion of correction of plan failures
- Expanded coverage for part-time workers
- Tax breaks for small businesses offering retirement plans
- Increased availability of Multiple Employer Plans for non-profit organizations by allowing them to join together
In conclusion, this bill being passed was, obviously, overall beneficial. After all, it assists in several challenges and problems faced by those trying to save for their retirement. And in regards to that topic: Are you looking for alternative ways of saving up money for your retirement? Because we may be able to help you with the products we offer. Reach out to us at Cornerstone Wealth and Tax Advisory to learn more.
For more information on the Secure Act 2.0, read this article from the National Law Review.