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

Retirement Champions Reengage on Next Retirement Bill

May 30, 2019

On May 14, 2019, Senators Rob Portman (R-OH) and Ben Cardin (D-MD) reintroduced the Retirement Security and Savings Act, which includes more than 50 discrete retirement proposals.

Senators Portman and Cardin have a history of working together on bi-partisan legislation, and their bill may be taken up by the Senate Finance Committee after passage of the SECURE Act/RESA. See a summary of the more notable provisions of the bill.

Portman/Cardin Retirement Security and Savings Act Provisions

  • 403(b) Investment Expansion — Amends the Internal Revenue Code and federal securities laws to permit 403(b) custodial accounts to invest in collective investment trusts.
  • Catch-Up Contribution Limits — A new retirement plan annual catch-up contribution limit of $10,000 would be established for participants in 401(k), 403(b), and 457(b) plans who have attained age 60. The current annual catch-up contribution limit, which is $6,000 in 2019, would continue to be available for individuals from age 50 to 59.
  • Student Loans — Codifies the ability of plans to provide a matching contribution to 401(k), 403(b) and governmental 457(b) retirement plans (including when the matching contribution is made to a 401(a) plan) for student loan repayments, specifically permitting employers to rely on employee certifications regarding student loan repayments, and directing the Treasury Department to publish model plan amendments and permit employers to establish reasonable procedures for employees to claim matching contributions on student loan repayments.
  • Lifetime Income Barriers — Provisions intended to reduce barriers to lifetime income products, including rules that would make it easier for retirement plan participants to purchase a qualifying longevity annuity contract.
  • Required Minimum Distributions (RMDs) — The age at which participants generally would be required to begin taking RMDs would increase to age 72 in 2023 and then to 75 in 2030. In addition, the Treasury Department would be directed to update mortality tables used to calculate RMDs within one year of the bill’s enactment, and then at least once every 10 years thereafter. The bill also would reduce the excise tax for missed RMDs from 50% to 25%, and exempt participants with aggregate DC plan and IRA balances of $100,000 or less from the RMD rules.
  • Harmonizing IRAs and Retirement Plans — Provides a series of changes intended to harmonize the RMD and rollover rules as they apply to IRAs and retirement plans.
  • Elimination of “First Day of the Month” Rule for 457(b) Plans — Allows deferral elections to be made at any time prior to the date the compensation being deferred is currently available.
  • Saver’s Credit — Makes the Saver’s Credit for low- and moderate-income savers refundable and requires that the credit be contributed directly to a retirement plan or IRA.
  • Small Financial Incentives for Contributing to a Plan — Allows 401(k) and 403(b) plans the option to provide small financial incentives (e.g., a $25 gift card) to motivate savers.
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