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Retirement Security and Savings Act

This bill was introduced with the goal of increasing savings in defined contribution plans and IRAs.  Highlights of the bill follow:

  • New automatic enrollment safe harbor for employers to meet nondiscrimination requirements: The minimum default level of contributions will be set at 6% the first year and escalate to 10% within 5 years.
  • Employers can make matching contributions to retirement accounts of employees paying off qualified student loan debt
  • Employees working between 500 and 1,000 hours per year would be eligible to participate in their employer’s defined contribution plan
  • Small businesses adopting a qualified plan for employees would receive a larger tax credit than under current law (currently the credit cannot exceed $500; proposed credit could be as large as $5,000)
  • Minimum Required Distribution blanket exception for individuals with less than $100,000 in aggregate retirement savings
  • Increased age for minimum required distribution from qualified plans or IRAs – age 72 in 2023 and 75 in 2030.
  • Reduction in the excise tax for failure to take a required minimum distribution, from 50% of the “shortfall” to at most 25% (and possibly 10% in some cases); December 20, 2018.