What SECURE Act 2.0 passage would mean for retirement plans

In these uncertain economic times, America's workforce has not lost sight of the importance and value of employer-sponsored retirement savings plans.  

These popular programs — such as 401(k) plans — are an essential tool in attracting and retaining talent in a tight labor market, as well as bringing financial security to workers and retirees. So it's important that the governing rules provide savings opportunities for workers and clarity and efficiency for employer plan sponsors. These rules could be significantly improved before the end of the year if the U.S. Congress passes the SECURE Act 2.0, a comprehensive retirement bill that would help workers save. 

For example, in addition to retirement changes, the legislation could help workers meet conflicting savings goals related to emergency savings and student loans. Other provisions provide needed clarity and simplification for the employers that sponsor these plans. And, the SECURE Act 2.0 is a rare piece of bipartisan legislation that has an opportunity to pass before the new Congress begins in January. The employee benefits community has been eagerly awaiting action on this bill all year long and, no doubt, will be on pins and needles leading up to the upcoming holiday recess. 

Read more: SECURE Act 2.0 will make retirement savings automatic — how employers can prepare

As the leading representative of the nation's largest employers in their capacity as sponsors of employee benefit plans for their workforce, The ERISA Industry Committee (ERIC) advocated for the Securing a Strong Retirement Act, the Enhancing American Retirement Now Act (EARN Act) and the Retirement Improvement and Savings Enhancement to Supplement Healthy Investments for the Nest Egg Act (RISE & SHINE Act). These three pieces of legislation that combined, would comprise SECURE Act 2.0.

Policymakers can deliver big wins to the entire retirement system if they adopt recommendations advanced by ERIC and outlined in a letter we recently wrote to Congress. 

Our recommendations represent a path forward to helping all workers save for retirement and for employers, with the help of their advisers, to manage and efficiently improve benefits in a competitive hiring environment during challenging economic times.

Among ERIC's commonsense suggestions: 

• Ease administrative burdens on plan sponsors by reducing unneeded notices and requiring regulators to review and make recommendations to simplify current disclosures
• Allow employers to make retirement plan matching contributions for employee student loan payments
• Facilitate options for workers to save for emergencies
• Create a lost-and-found database to help reunite workers with lost pensions 
• Strengthen retiree healthcare and life insurance benefits by continuing to permit overfunded pension plans to fund them
• Update the cap for transferring former employees' retirement funds to an IRA
• Increase the age for required minimum distributions
• Increase the "catch-up" contribution limits for workers nearing retirement
• Clarify the rules for recoupment of inadvertent retirement plan overpayments to innocent participants 
• Eliminate unnecessary annual increases to the insurance premiums defined benefit pension plans pay to the government

None of ERIC's recommendations create new mandates or burdens, and all of them are born of the needs of today's workforce and reflect the modern financial environment. ERIC member companies have vastly different workforces and benefits plan designs, but employers, workers, and retirees can all gain from a retirement system bolstered by policy enhancements.
Read more: How Americans could save $83 billion with one tweak to the 401(k) system

The future and security of the retirement savings plans of millions of currently employed and retired workers will be improved by this legislative package.

Please communicate right away your organization's support by telling Congress to pass an improved SECURE Act 2.0.