VSDebates are divided on just about every topic, but a recent bill passed in the House of Representatives showed that there is at least one area where our representatives on both sides of the aisle can agree: retirement savings.
Of course, it’s no secret that people don’t save enough for retirement. A recent survey by the Federal Reserve found that the median amount of savings in Americans’ retirement accounts was just $65,000. Another study of the Insured Retirement Institute data revealed that about 33% of workers are saving less than 5% of their income for retirement and that 25% of Americans have no retirement savings, according to a report by an accounting firm watercraft. the the wall street journal warns that a generation of Americans is entering old age the least prepared for decades and, according to the Office of Government Accountabilityabout half of households aged 55 and over have no retirement savings.
So…enter Washington, with two bills aimed at solving this problem.
The most recent of these bills is called the Securing a strong retirement law and he recently passed the House by a 414-5 margin. It builds on 2019 Preparing Every Community for Retirement Enhancement. The two bills are called Secure Act 1.0 and Secure Act 2.0.
The original Secure Act 1.0 fell under the radar due to its passage so close to the Covid outbreak. But it includes plenty of incentives for small businesses to help their employees save for retirement. Among these incentives are tax credits to pay half the start-up costs of a 401(k) plan for employers with less than 100 employees, an additional tax credit for existing plans to require automatic enrollment, a postponement of the age at which distributions from a retirement plan are required until age 72 (allowing older employees to work longer), the possibility of including more part-time employees in a retirement plan and tax incentives to allow the distribution of funds from 529 education plans for the repayment of student loans. The bill also expanded the availability of multi-employer plans so companies could share administrative expenses.
The first bill was so popular that a House version 2.0 bill is now making its way to the Senate, where bipartisan approval is also expected, after some minor changes.
This Bill Adds Even More Retirement Incentives for Businesses and Employees, Including 100% Reimbursement of 401(k) Plan Startup Costs to Employers Through Tax Credits, Further Increase minimum distribution age to 75 and now a requirement to automatically enroll new employees. into a company pension plan (they can always opt out) with contributions rising from 3% to 10% in seven years. The new bill also establishes a national online database of “lost and found retirement savings” for people who may have lost track of their retirement plan membership. It also allows for more retirement distributions and after-tax plans like Roth IRAs to help victims of domestic violence and other hardships.
Is all this really necessary? Some experts, like Andrew G Biggs at American Institute of Enterprise, makes it clear why the “crisis” of media retirement is exaggerated. And it may not be a retirement “crisis,” but it certainly is a problem.
The Secure Act 2.0 will always benefit employees and employers. To me, that’s a no-brainer – low-cost regulation that strongly encourages people to do what they should be doing and that’s financial prudence. I believe we will see this bill pass through the Senate and legislation signed this year, all with significant bipartisan support. Indeed, as most small business owners will agree, this is one of those bills that is quite difficult to oppose.