Retirement Savings Plans,For Individuals,For Plan Sponsors,Custom

House Passes SECURE Act by 417-3 Vote, Senate Reintroduces RESA

May 30, 2019

The House passed the Setting Every Community Up for Retirement Enhancement (SECURE) Act by a 417-3 vote on May 23, 2019. Senate Finance Committee Chairman Chuck Grassley (R-IA) and Ranking Member Ron Wyden (D-OR) reintroduced the Retirement Enhancement and Savings Act (RESA) of 2019 on April 1, 2019. The overwhelming majority of provisions in both bills are identical (or very similar).

With House passage of the SECURE Act, the next step is for the House and Senate to work to reconcile differences in the bills in order to potentially bring the legislation to President Trump for signature later in 2019.

View highlights of the SECURE Act and RESA legislation.

Key Features of the SECURE Act and RESA

Item House SECURE Act Senate RESA

Voluntary Firefighters and Emergency Medical Providers

Maximum exclusions for qualified state and local tax benefits and qualified payments reinstated for one year (2020); qualified monthly payments increased from $30 to $50 that the taxpayer performed such services.

Same provision in RESA

Post 70½ IRA Contributions

Repeals limit prohibiting individuals age 70½ and above from making non-rollover contributions to traditional IRAs.

Same provision in RESA

Increase Beginning Date of Required Minimum Distributions (RMDs)


Increases age for commencing RMDs for plans and IRAs from 70½ to 72. These changes would apply to distributions required to be made after Dec. 31, 2019, with respect to individuals who attain age 70½ after such date.

Provision not in RESA

Portability of Lifetime Income Investments

Participants in qualified defined contribution (DC), 403(b), and governmental 457(b) plans allowed to take distribution of a lifetime income investment without penalty if lifetime income investment is no longer authorized to be held under the plan.

Distribution must be made via a direct rollover to an IRA or other retirement plan or, in the case of an annuity contract, through direct distribution to the individual. The purpose of this provision is to eliminate the need to recordkeep annuities and similar products after they have been discontinued by the plan sponsor.

Same provision in RESA

Lifetime Income Disclosures

Employee Retirement Income Security Act of 1974 (ERISA) DC plan benefit statements required to include lifetime income disclosure at least once a year, illustrating amount of monthly payments the participant would receive if total accrued benefits used to provide lifetime income through:

1. a qualified joint and survivor annuity and
2. a single life annuity.

Plan sponsors, plan fiduciaries, and other persons would have no ERISA liability for disclosure that meets applicable rules and assumptions.

The Department of Labor would be required to 1. prescribe permissible assumptions, 2. issue a model lifetime income disclosure, and 3. issue interim final rules.

Same provision in RESA

Fiduciary Safe Harbor for Selecting Annuity Providers

Statutory safe harbor would be added to ERISA similar to existing regulatory safe harbor for the selection of annuity providers, except that the statutory safe harbor would also:

  • Allow DC plan fiduciaries to rely on written representations from insurers regarding their financial capabilities under state insurance law (this changes the current safe harbor, which requires the plan sponsor to determine the financial capacity of the insurance company); 
  • Specify that a fiduciary is not required to select the lowest-cost contract but may also consider the value provided by other features and benefits and attributes of the insurer;
  • Clarify that fiduciaries are not required to review the appropriateness of a selection after the purchase of a contract for a participant or beneficiary; and 
  • Generally, deem fiduciaries to have conducted a periodic review if the fiduciary annually obtains certain written representations from the insurer.

Same provision in RESA

Distributions for Birth or Adoption

Would allow penalty-free, in-service distributions from a DC plan (including a 403(b) or 457(b) plan) or IRA in connection with a birth or adoption, up to $5,000. The distribution could be later repaid and treated as a rollover. It appears that a plan would not be required to offer this distribution option.

Provision not in RESA

"Stretch" RMDs

Upon death of an IRA owner or DC plan participant (including in a 403(b) or 457(b) plan), the individual beneficiary would be required to draw down entire inherited interest within 10 years.

This provision does not apply to eligible designated beneficiary who is:

  • the surviving spouse;
  • a child under the age of majority;
  • disabled or chronically ill; or
  • any other person who is not more than 10 years younger than the participant/IRA owner.

 In these cases, the distribution could be taken over the beneficiary's life expectancy; the 10-year rule would apply to a minor upon reaching the age of majority.

Current law is retained for non-individual beneficiaries, such as estates and charities, which are subject to a five-year rule and cannot "stretch" the payouts over a longer period.

RESA would require distributions within five years of death, except in the case of an "eligible designated beneficiary" (same individuals as in the SECURE Act).

RESA would exempt from this requirement up to $400,000 (indexed) per designated beneficiary. For example, if a decedent leaves $450,000 to a non-eligible beneficiary, the beneficiary can take $400,000 over his/her life expectancy and the remaining $50,000 over five years.

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