The House of Representatives Ways and Means Committee unanimously passed the Securing a Strong Retirement Act, which will advance it for further consideration by the full chamber. The Act, referred to as the SECURE Act 2.0, is an extension of the 2019 Setting Every Community Up for Retirement Enhancement (SECURE) Act. Some of the provisions include:
- Auto-enrollment Requirement: 401(k) and 403(b) plans must include an auto-enrollment provision for eligible employees, with the initial deferral percentage of 3% but no more than 10%, with an escalation clause requiring a minimum 1% increase until 10%. Employees may opt out of this coverage.
- Collective Investment Trusts (CITs): The bill allows for the investment in CITs within 403(b) custodial accounts. In so doing, securities laws would be amended to allow for such investment vehicles to be utilized within 403(b) plans, similar to 401(k) plans.
- Higher Catch-Up Limits: A catch-up limit of $10,000 would be applicable at age 62, 63, and 64.
- Student Loan Payments: Employers may match employee student loan payments with a contribution to the plan.
- Required Minimum Distributions (RMDs) and Life Annuities: Certain barriers that affect the availability of life annuities in qualified plans and IRAs under current law (due to an actuarial test within the RMD regulations) would be lifted. Also, RMD rules that have historically impeded the use of qualified longevity annuity contracts (QLACs) in retirement plans and IRAs would be addressed, so that the intended purpose of the QLACs can be realized.
www.plansponsor.com; May 5, 2021.