Back in March, a hearing was held by the Senate’s Health, Education, Labor and Pensions (HELP) Committee. At the hearing, retirement professionals urged lawmakers to take action and increase the accessibility of workplace savings plans. Specifically, they’ve stressed the importance of making it easier for workers to save away more money for retirement. “It is painfully clear we need to do more to strengthen people’s emergency savings and retirement security,” said Sen. Patty Murray, chair of the HELP Committee. Murray has said that she’s working with Richard Burr, the ranking Republican on the committee, to devise a plan to address a number of retirement security challenges. For example, the need for people to have funds saved away to address urgent, unexpected issues.
The recent experience of the pandemic highlighted the need for people to have emergency savings. Keeping separate money stashed away specifically to use in case of unforeseen problems is a challenge. Petros Koumantaros, one retirement professional who was present for the hearing, said something similar. “The Covid-19 pandemic illustrated how ill-equipped many Americans were to manage financial emergencies.”
Up on Capitol Hill, retirement security is an often-discussed issue. As a result, lawmakers have been making an effort around the clock to advance the common goal of higher savings rates. One product of that effort is the Securing a Strong Retirement Act. This Act is also referred to as the Secure Act 2.0, due to the way it builds on the results of the Secure Act of 2019.
Both acts were designed to help small businesses in offering retirement plans. For example, by promoting auto-enrollment in workplace retirement plans. Additionally, the Secure Act 2.0 offers tax breaks for small businesses so that they can set up those plans. Also, it increases the RMD age for plan participants. Doug Chittenden, head of relationships at TIAA, said: “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.” Additionally, he said, “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 More Available and Easier
So, the Secure Act 2.0, also known as the Securing a Strong Retirement Act, has improved workplace retirement plans by:
- The possibility for larger catch-up contributions to be made
- Expanded coverage for part-time workers
- The expansion of correction of plan failures
- Increasing the age at which RMDs must begin
- Tax breaks for small businesses offering retirement plans
- Increased availability of Multiple Employer Plans for non-profit organizations by allowing them to join together
So, in conclusion, this bill being passed was, obviously, mostly beneficial to people trying to save up money for retirement. It addresses several challenges that come with trying to save retirement money. Also, in regards to that topic: Are you looking for an alternative way of adding to your nest egg? We may be able to help. We offer insurance products that can get you reasonable returns over time. Reach out to us to learn more.
For more information on the Secure Act 2.0, read this list from the National Law Review.