For retirement changes in Secure 2.0, December is do-or-die time

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For supporters of congressional proposals to improve the US pension system, it’s been a busy few weeks.

Lawmakers will return to Washington next week to complete the so-called lame-duck session — the legislative period between the midterm elections and the new Congress, which begins Jan. 3. The pension reform proposal called “Secure 2.0” is expected to be part of the legislation that crosses the finish line.

“All signs point to Congress taking action before it passes … but the exact date and time, no one knows,” said Paul Richman, head of government and policy affairs at Insured. Retirement Institute.

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Secure 2.0 is designed to build on improvements to the pension system that were introduced by the Secure Act of 2019. These changes include providing greater access to pension benefits for part-time workers and increasing the age at which minimum distributions, or RMDs, are required from certain retirement accounts (to age 72 from 70½).

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Some measures were supported in both the Senate and the Senate

This time, some of the proposals supported by the Senate and the Senate include:

  • It makes it easier for employees to save and access emergency funds.
  • Increasing access to the so-called saver’s tax credit, which is available to low- and middle-income workers.
  • Increasing the amount of extra money (called contributions) people age 50 and over can get into their retirement accounts.
  • Require the amount to be considered a Roth contribution (after tax).
  • Allow part-time workers to qualify for their company’s 401(k) after logging at least 500 hours per year for two years instead of three.
  • It makes it easier for employers to contribute to a 401(k) plan on behalf of an employee paying off student loans instead of saving for retirement.
  • An increase when RMDs must begin at age 75 from the current age of 72.
  • Reducing the penalty for not taking RMDs to 25%, and in some cases, 10%, from the current 50%.
  • It allows people to put more money into a long-term annuity contract, or QLAC.
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Differences between the House bill and the Senate proposal need to be ironed out — a process that is already underway, Richman said — before the final package can be considered.

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This year, the House passed the Secure 2.0 version, the Securing a Strong Retirement Act (HR2954) in late March by a vote of 414-5.

In the Senate, the committees with jurisdiction over provisions related to pensions have approved a proposal that forms the basis of that chamber’s version of Secure 2.0: called the Rise & Shine Act (S.4353) of the Committee on Health, Education, Labor and Pensions. in June, and the Finance Committee approved a bill in September known as the EARN Act (S.4808).

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Secure 2.0 can be linked to a bill that must be passed

Assuming Secure 2.0 won’t get a vote on its own, supporters hope lawmakers will include it in a bill that must be passed this year. This may include bills to fund the government.

In September, Congress passed a shutdown measure to fund the government’s 2023 fiscal year (which began on October 1) through December 16. conditions — or government intervention.

The 2019 defense legislation was originally passed in December of that year as part of the spending bill.

There could be other potential Secure 2.0 bills attached to it, such as the National Security Authorization Act, Richman said.

If this round of proposed changes doesn’t make it into law this year, the full legislative process will need to begin in the next Congress.

“No one wants to see that,” Richman said. “The bill has to be redone, go to committee again, bring it to the floor for a vote – it’s a long process.”

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