Among the major provisions of retirement security legislation included in the massive $1.7 trillion omnibus appropriations measure released Tuesday are 14 specific issues advocated by the Insured Retirement Institute (IRI).
The omnibus measure includes “SECURE 2.0” retirement provisions (Division T – Pages 2046 – 2404) negotiated from among three bills voted on by the House of Representatives and Senate committees. Fourteen of those provisions were specifically advocated by IRI and outlined in the trade association’s 2022 Retirement Security Blueprint.
“The common-sense solutions in this legislation are another step forward in addressing our nation’s retirement crisis and will make a real difference in the financial future of America’s workers and retirees,” said Wayne Chopus, IRI President and CEO.
The mainly bipartisan bill is widely expected to pass Congress before it adjourns for the year on Friday and be sent to President Joe Biden for his signature.
IRI-Advocated Retirement Provisions in 2023 Omnibus Appropriations Legislation:
- Reform the required minimum distribution (RMD) rule.
- Authorize the formation of 403(b) pooled employer plans (PEPs).
- Enhance the start-up tax credit to encourage small businesses to establish workplace plans.
- Clarify the retirement plan start-up tax credit eligibility period for small employers who join multiple employer plans (MEP) or PEPs.
- Increase automatic enrollment contribution rates and enhance automatic plan features.
- Help employees save for retirement while repaying student loans.
- Increase the catch-up contribution limits for baby boomers.
- Expand opportunities for military spouses and ready reserve members to maximize their retirement savings.
- Establish a national online lost and found for America’s workers’ retirement accounts.
- Allow broader use of qualifying longevity annuity contracts (QLAC’s.)
- Facilitate the use of low-cost exchange traded funds (ETF) investments in variable annuities.
- Examine opportunities to make long-term care insurance more tax-advantaged, affordable, and accessible.
- Provide opportunities to accumulate or access emergency savings while maintaining retirement savings.
- Allow penalty-free withdrawals from retirement accounts as relief from natural disasters.
“This legislation will deliver billions in additional retirement savings to help ease the insecurity and anxiety felt by workers and retirees about having enough money to last throughout retirement,” Chopus added.
The bill is projected to increase retirement savings by billions of dollars over 10 years for workers and retirees.
- $40.5 billion for new workers with boosted auto-enrollment
- $20.5 billion for small business employees through modified tax credits
- $9 billion for older workers (people 62-64) through higher catch-up contributions
- $8.5 billion for student loan borrowers through the employer match for student loan repayment
- $2.7 billion for low- and middle-income earners through the reform and promotion of the Saver’s Credit
- $1.5 billion for long-term, part-time workers by reducing the required time on the job from three years to two for plan access
- $865 million for nonprofit workers through the expansion of multiple employer plan rules to include 403(b) plans
- $117 million for military spouses through the new tax credit for small employers to accelerate access to retirement plans
The omnibus appropriations bill also includes the Registration for Index-Linked Annuities (RILA) Act (Division AA – Pages 2726 – 2730). That measure directs the Securities and Exchange Commission (SEC) to devise a new form for annuity issuers to use when filing registered index-linked annuities (RILAs).
Under current SEC rules, these and other innovative new products must be registered using forms designed primarily for equity offerings and therefore require extensive information that is not relevant to prospective annuity purchasers. These forms also require disclosure of financial information prepared in accordance with generally accepted accounting principles (GAAP), which many insurers are not otherwise required to produce.
• Click on this link for a Section-by-Section review of Secure 2.0 Provisions in omnibus appropriations as provided by the Senate Finance Committee.
Reminds me of the most feared words in the English language . . . “I am from the government and I am here to help you”.
Authorize the formation of 403(b) pooled employer plans (PEPs).
Enhance the start-up tax credit to encourage small businesses to establish workplace plans.
Increase automatic enrollment contribution rates and enhance automatic plan features.
and . . .
massive $1.7 trillion omnibus appropriations measure
What could possibly go wrong here?
I sure hope Secure Act 2.0 corrects the current glaring ommission of the "see through/look through" trust provision for custodians of qualified accounts. prior to 2019 Secure Act, custodians were able to have a trust beneficiary & as long as the custodian could look in the trust & find specified natural persons, they could process claims to those individuals. In the last 2 years, because Secure Act was silent on the see through/look through, custodians are only permitted to pay the claim to the actual trust, most times in a lump sum taxable check & many times taxable at the high trust tax rate. (5 year deferral allowed for the trust if deceased was under age 72 RMD date)
Seen some huge tax bills this year & many of the attorney's that drafted the trust & directed the person to name the trust were surprised this has occurred.
Unless extremely unique situation ( 2nd marriage, special needs, financial problems) likely best to not have a trust on your bene designation for qualified accounts unless absolutely necessary. Spouse as primary, contingent kids, per stirpes can provide the best tax efficiency available & in cases where annuities are holding the accounts, additional claim options available such as payout annuity/spia to receive the funds & spread the tax
Only if the citizens make it that way… or think it that way.
When you believe the lie and repeat the lie long enough … the lie is eventually the truth.
Our government is what we make it to be.
I have known attorneys who would exclude qualified accounts from trusts for this very reason. I had a very interesting discussion with an estate planning attorney once who had a long list of past provisions that were NOT grandfathered in when laws changed.
With the stroke of a pen, the whole plan can go to hell. So unless it was a special needs situation, he often recommended qualified accounts just utilize the bene designation for the natural persons directly.