The House of Representatives and Senate leaders have reached a deal to include the Secure Act in the federal government appropriations bills for fiscal year 2020.
The Secure Act — or the Setting Every Community Up for Retirement Enhancement Act — is aimed at giving small business owners the ability to participate in “pooled employer plans” that would bring down the costs of offering retirement savings plans to employees. It was passed by the House of Representatives in May but had been stalled in the Senate.
The bill that passed in the House of Representatives includes a series of measures that had been introduced separately in the past.
These include the establishment of tax-favored multiple employer retirement plans; allowing contributions to IRAs past the current cap of 70 1/2 years of age; raising the age on required minimum distributions from IRAs from 70 1/2 to 72; and lowering the minimum number of hours long-term employees must work annually to make it onto their company’s pension plan.
Meanwhile, the appropriations package, which would need to be passed by Congress before midnight Friday to prevent a government shutdown, includes 12 bills that detail around $1.4 trillion worth of federal spending.
“We have a first down and goal on the one-yard line,” Wayne Chopus, president and CEO of the Insured Retirement Institute, said in a statement upon learning that the Secure Act was included in the government appropriations package.
“Congress and the President are about to deliver a meaningful, positive benefit to millions of American workers by expanding opportunities to save for and achieve a dignified retirement,” Chopus adds.
The IRI describes the Secure Act as the “most comprehensive” retirement security legislation in more than a decade.
IRI says the Secure Act will expand access to workplace retirement plans for millions of full- and part-time workers, particularly small business employees. It will also expand opportunities for workers to obtain guaranteed lifetime income products, the group adds.
A report from the Nationwide Retirement Institute shows that nearly 60% of small business owners believe the Secure Act would improve their ability to provide employees with 401(k) plans because it would make them more affordable. NRI is part of insurance and financial services firm Nationwide.
Teri O’Connor, founder of and senior corporate retirement advisor at Altus Consulting Group, estimates that around 47% of small business owners “still don’t have a retirement plan in place” for their employees.
“Most small employers are still struggling; they still want to keep their businesses going. They still have other priorities in their lives besides the 401(k),” O’Connor previously told FA-IQ. “I know the Secure Act is going to try to address that. But it’s still not a mandate; it’s an improvement.”