WASHINGTON
– Senate Finance Committee Chairman Chuck Grassley of Iowa today praised the
passage of the SECURE Act in the House of Representatives.
“The
SECURE Act, which passed today in the House of Representatives and includes my
Retirement Enhancement and Savings Act, takes an important step forward to help
encourage and facilitate retirement savings. It also includes an important fix
to eliminate unintended effects of the tax law on children with unearned
income, such as Gold Star families and students who earn scholarships and
grants,” Grassley said. “This legislation is an example of bipartisan
cooperation to solve issues on behalf of Americans. I appreciate the hard work
of my colleagues in the House and look forward to its quick passage in the
Senate.”
The SECURE
Act is legislation largely based on the Retirement Enhancement and
Savings (RESA) Act of 2019, legislation Grassley introduced earlier this
year with Ranking Member Ron Wyden of Oregon. Both bills share reform
proposals to increase retirement savings in several ways, including:
·
Improving
an existing type of retirement plan called a “multiple employer plan” or MEP.
Such plans would be expanded to make it easier for small employers to join
together to sponsor a single retirement plan for their workers. This would help
millions of Americans save for retirement, and reduce plan-administration costs
for small businesses;
·
Helping workers to ensure they have
adequate income in retirement by creating new rules for employers that offer
lifetime-income arrangements in their retirement plans;
·
Enhancing
the ability of employees to transfer their retirement plan assets to a new
retirement plan when they change jobs;
·
Encouraging
employees to increase their retirement savings annually through automatic
increases in contributions to 401(k) plans and requiring employers to provide
estimates of how much an employee’s account would provide during retirement if
it were invested in an annuity; and,
·
Continuing
to allow an employee to pass a limited amount of an IRA or 401(k) account to a
family member or other beneficiary to permit the beneficiary to continue the
tax-deferred saving for retirement.
Among
its additions to RESA, the SECURE Act increases the age for
taking required minimum distributions from 70½ to 72. It also includes
proposals to require businesses offering retirement plans to cover certain
part-time workers, allow penalty-free withdrawals from retirement accounts to
cover birth and adoption expenses, expansion of 529 savings plans to cover
apprenticeship programs and certain student loan payments and changes to help
certain home health worker increase retirement-plan contributions.
Notably,
the SECURE Act also includes an amendment that addresses unintended
consequences of reforms to the “Kiddie Tax,” to ensure middle-class
families with children receiving unearned income are not subject to tax rates
intended to prevent wealthy parents from taking advantage of their child’s
lower rate. This amendment applies broadly, but in particular will benefit
families who have children with income from military survivor benefits,
applicable Native American tribal payments, Alaska permanent fund dividends and
certain scholarships and grants.
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