House Ways and Means Committee leaders introduced a long-awaited bipartisan collection of retirement savings incentives on Tuesday, building off another sweeping package enacted late last year.
The new proposal, intended to lay the groundwork for action next year, would among other things expand and enhance the saver's credit for lower-income households, and increase the age for required minimum distributions from 401(k)s and other tax-favored plans from 72 to 75 years of age.
In one long-sought change, the bill would allow employees to count student loan repayments toward their employers' matching contribution for a retirement account. The IRS in 2018 ruled that health care products company Abbott Laboratories could offer such a plan to its employees, which the legislation would codify and incentivize other companies to do the same.
Other provisions would require employers offering a new retirement plan to automatically enroll eligible employees; boost limits for catch-up contributions to retirement plans by workers who have reached age 50 from $6,500 a year to $10,000; and enhance an existing tax credit for small employers starting a workplace plan sweetened by a new tax credit of up to $1,000 per employee.
House Ways and Means Chairman Richard E. Neal often points to statistics showing 55 million Americans have no access to a workplace retirement plan. There are an estimated 10,000 people each day who become eligible for Social Security, and many will face a retirement dependent mainly or wholly on Social Security's average benefit of $1,514 a month.
"COVID-19 has only exacerbated our nation's existing retirement crisis, further compromising Americans' long-term financial security," Neal, D-Mass., said in a joint release with the panel's ranking member, Kevin Brady, R-Texas. "Our legislation will make it easier for folks to save, protect Americans' retirement accounts, and give workers more peace of mind as they plan for the future," Brady said.
Never mind the politics
Releasing a large, bipartisan bill in the rancorous week before an election makes for interesting timing. Both Neal and Brady confirmed in late September that they had reached broad agreement on a package, though staff noted that there were still details to be ironed out.
Brady had said he expected the bill could be concluded by late October. Neal suggested it could be done before the election, particularly if members remained engaged in negotiating a coronavirus relief deal with the White House.
While it's possible that the measure could be tacked on to a lame-duck legislative vehicle, like a COVID-19 package or omnibus spending bill, it seems unlikely at this point given the retirement proposal has only now arrived on the scene.