The House of Representatives took a significant step on May 23 toward making it easier for more employers to set up 401(k) retirement plans for their employees, passing the Setting Every Community Up for Retirement Enhancement Act of 2019 and paving the way for passage of a similar measure in the Senate.
If enacted, changes could take effect in time for the 2020 plan year.
Also known as the SECURE Act, H.R. 1994 would allow unrelated small businesses to band together to sponsor open 401(k) multi-employer retirement savings plans, reducing the costs and simplifying the administrative burdens that would otherwise fall to each employer. Currently, multi-employer plans are only available to employers that are somehow related, such as being in the same industry or belonging to a trade association.
The bill contains other technical measures designed to make defined-contribution retirement plans such as 401(k)s a viable benefit for more employers to offer their employees.
“With passage of this bill, the House made significant progress in fixing our nation’s retirement crisis and helping workers of all ages save for their futures,” said House Ways and Means Committee Chair Richard E. Neal (D.–Mass.), who sponsored the legislation. “The legislation closes loopholes and makes it easier for small business employees, home care workers, and long-term part-time workers to save for retirement.”
The SECURE Act passed 417–3, with overwhelming bipartisan support.
It aligns closely with the Retirement Enhancement and Savings Act of 2019, a companion bill currently working its way through the Senate. That bill is on track for a floor vote before the full Senate in coming weeks, and is expected to pass.
“We’re providing new incentives for employers to adopt retirement plans,” said Senate Finance Committee Chairman Chuck Grassley (R.–Iowa). “The bill also helps reduce costs of operating these plans, and creates new provisions to encourage workers to plan and save for retirement.”
Capitol Hill watchers say differences between the two bills should be easy to reconcile in a joint House-Senate conference committee.
President Trump could sign the resulting legislation into law this summer.
In addition to making it easier to set up multi-employer plans, both bills would:
- Encourage employers to automatically enroll new employees in defined-contribution retirement plans by offering a series of tax credits, up to $500 for up to three years.
- Provide portability of lifetime investment products for workers who change plans.
Online resource Read the full text of the SECURE Act at www.congress.gov/bill/116th-congress/house-bill/1994.
