Business

/

ArcaMax

Congress' new retirement bill might actually help us save more money

Erin Arvedlund, The Philadelphia Inquirer on

Published in Business News

Congress has proposed legislation to help Americans sock away more money. Yes, it's true: Lawmakers might actually do something to help solve our retirement savings pickle.

Wending its way through the House and Senate this month is an epic bill called "The Setting Every Community Up for Retirement Enhancement" (SECURE) Act of 2019. The act is a bit of kitchen-sink legislation, with goodies for current and future retirees, including students. Let's go through some of the offerings.

The SECURE Act starts by raising the age for required minimum distributions, known as RMDs, from investment accounts to 72 years of age from 70 1/2 years. This recognizes that Americans are living longer and shouldn't be forced to take money out of the markets just because of their age.

The legislation also makes it easier for employers to offer annuities in 401(k) and 403(b) retirement plans. (Read: heavy lobbying by insurance companies that sell these annuities.)

Also in the bill: Americans can take out money from retirement accounts without a penalty for a birth or adoption, up to $5,000.

The SECURE Act also allows employees to invest up to 15 percent, up from 10 percent, of paychecks to their 401(k) plan. Those contributions and any employer match grow tax free.

 

Since women are more likely to work part-time for at least some portion of their careers, the bill also requires retirement plans to open up to all employees who either work 1,000 hours in one year or at least 500 hours for three consecutive years. (Under current law, employers could set any eligibility rules they wanted, as long as employees who complete 1,000 hours of work in one year can enroll.)

One provision not related to retirement -- the SECURE Act would expand 529 college savings plans to cover the costs of apprenticeship programs and homeschooling. And here's the best part: It allows 529 funds to be used to pay student loans up to $10,000. Thank you, Congress. This is a no-brainer.

For those who want to read the bills in full or call the sponsors, the SECURE Act incorporates measures from the previous Senate bill, dubbed the Retirement Enhancement and Savings Act, or RESA. The SECURE Act was introduced by House Ways and Means Committee Chairman Richard Neal (D., Mass.), along with Rep. Ron Kind (D., Wis.), Ways and Means Committee ranking member Kevin Brady (R., Texas), and our own Rep. Mike Kelly (R., Pa.).

Vanguard Stewardship report

...continued

swipe to next page
 

Comments

blog comments powered by Disqus