Posted on 03/30/2019 11:39:10 AM PDT by abb
Congress is making another push on legislation that could make it easier for small companies to offer 401(k) plans and for workers to guarantee themselves an annual income after they retire.
A bipartisan group of lawmakers including Rep. Richard Neal (D., Mass.), chairman of the House Ways and Means Committee, announced Friday the legislation would repeal the age cap for contributing to individual retirement accounts, currently 70½. It would also increase the age at which owners of tax-deferred retirement accounts are required to start taking withdrawals from those accounts to 72 from 70½.
Because the measure has support from key lawmakers in both parties, it is “fairly likely” to pass this year, said Shai Akabas, director of economic policy at the Bipartisan Policy Center in Washington.
The bill would encourage 401(k)-style plans to offer annuities, which help participants transform their balances into a steady lifetime income.
(Excerpt) Read more at wsj.com ...
At first glance it sounds OK.
Nothing mandatory, just more flexibility.
ping
Sweeping Retirement Bill, Raising RMD Age, Unveiled by House Panel
The SECURE Act of 2019 incorporates measures from the earlier RESA bill.
By Melanie Waddell | March 29, 2019 at 04:09 PM
House Ways & Means Committee Chairman Richard Neal, D-Mass., introduced Friday new bipartisan legislation, The Setting Every Community up for Retirement Enhancement (SECURE) Act of 2019, which eases the ability to offer annuities in 401(k) and 403(b) plans and raises the age for taking required minimum distributions from 70 1/2 to 72.
The SECURE Act incorporates measures from the previous bill dubbed the Retirement Enhancement and Savings Act, or RESA.
The bill, introduced along with Rep. Ron Kind, D-Wis., Ways & Means Committee ranking member Kevin Brady, R-Texas, and Rep. Mike Kelly, R-Pa., “expands opportunities for Americans to increase their retirement savings and improves the portability of lifetime income options from one plan to another,” lawmakers said.
The new bill includes the core provisions of H.R. 1007, RESA, which the Insured Retirement Institute said it has long supported “plus additional provisions from previously introduced measures.”
The Ways and Means Committee is expected to vote on the new measure next week, likely Tuesday.
With the bill, “we’re taking bold, bipartisan action to address our nation’s retirement crisis,” Neal said. “Providing more, and easier, ways to save allows workers to actively plan for their futures and avoid falling into poverty later in life. Boosting Americans’ financial security in retirement supports families and strengthens our economy.”
Brady added that the bipartisan bill is intended to help American workers “make their own decisions about their finances and retirement. Our reforms will help families save more and earlier for the future, ensuring folks have the flexibility and control over their own savings they need for whatever life throws their way.”
Brady added that the looked forward “to advancing these measures soon.”
In January, Neal, a longtime champion of retirement security, placed retirement income security among his top four legislative priorities for the year.
The committee held a hearing in early February about retirement issues where several policy proposals contained in the new bill were discussed.
“It’s quite clear to me that Chairman Neal says what he means,“ said Wayne Chopus, president and CEO of IRI, in a Friday statement. “Three months ago, Chairman Neal put retirement security on his priority list and since then, we’ve had a hearing, negotiations, a new bill and a scheduled vote to advance it to the House floor. This is major progress.”
IRI says the SECURE Act contains “several common-sense measures” to help Americans by expanding opportunities to save for retirement; increasing access to lifetime income products; helping savers make more informed decisions about their finances for retirement and enhancing features of workplace retirement plans.
The SECURE Act will include, once marked up on Tuesday, provisions to remove restrictions on an employer’s ability to band together in a multiple employer plan (open MEP).
Additional IRI-supported provisions added to the SECURE Act include measures to require employers to allow long-term, part-time workers to participate in their workplace 401(k) plan, and a measure that would increase the current required minimum distribution age limit from 70 ½ to 72 to help workers who face an increased risk of outliving retirement assets because of longer lifespans.
“We look forward to next week’s committee vote to advance this bill to the House floor,” Chopus said. “This is clearly is a major step forward to address our looming retirement crisis.”
They should write into the legislation of the bill that Government will never have the right to demand or invade the funds of 401/k holders for any reason beyond the taxing rules. Thieving socialists would love to invade these funds in the future.
RMD, Later the better,
Wonder if that means whats already it motion can be postponed for 2 more years.Hope so
sounds like a couple of very good steps forward...so far
let’s remove the tax on withdrawls on IRA/Keogh/403b/415/etc
plans... at least, remove the tax after age 70!
that will do a whole lot to stimulate both savings and the larger economy, and in one very easy stroke too!!
RMD bumps up taxable income to where SS is now taxed at 85 %
Gee thanks
To amend the Internal Revenue Code of 1986 to modernize and improve the Internal Revenue Service, and for other purposes.
They won’t attack IRA/401K money directly.
How they’ll do it is to means test (more than they do already) Social Security. Or they’ll even say since you saved and scrimped for your own retirement and have enough money to make do, you don’t “need” SS, and won’t get it.
The Retirement Plan Complication Act of 2019 is probably what it should be called. Congress won't actually ever reform Social Security or make it more attractive for taxpayers to avoid taxes.
“The bill would encourage 401(k)-style plans to offer annuities, which help participants...”
Call me skeptical with the offer of “help” in converting the 401(k) into an annuity. They are probably helping someone else... like the companies that manage all the 401k $$$ not wanting to see it walk out the door at retirement. And why would the federales want to wait an extra 1.5 years for their revenue?
As long as it isn’t mandatory, it’s just another option: take it or leave it.
https://waysandmeans.house.gov/sites/democrats.waysandmeans.house.gov/files/documents/SECURE%20Act%20section%20by%20section.pdf
Section 106. Repeal of Maximum Age for Traditional IRA Contributions
The legislation repeals the prohibitionon contributions to a traditional IRA by an individual who has attained age 70½. As Americans live longer,an increasing number continue employment beyond traditional retirement age.
Section 113. Increase in Age for Required Beginning Date for Mandatory Distributions
Under current law, participants are generally required to begin taking distributions from their retirement plan at age 70 ½. The policy behind this rule is to ensure that individuals spend their retirement savings during their lifetime and not use their retirement plans for estate planning purposes to transfer wealth to beneficiaries. However, the age 70 ½ was first applied in the retirement plan context in the early 1960s and has never been adjusted to take into account increases in life expectancy. The bill increases the required minimum distribution age from 70 ½ to 72.
https://waysandmeans.house.gov/sites/democrats.waysandmeans.house.gov/files/documents/NEAL_008_xml_0.pdf
EFFECTIVE DATE. — The amendments made by this section shall apply to distributions required to be made after December 31, 2019, with respect to individuals who attain age 70 1⁄2 after such date.
Yes. I’ve always figured, even though we all pay into SS, those who have saved and invested in 401Ks could easily be told ‘well, you HAD the money to save and invest, so you obviously don’t ‘need’ a return on your SS money’. Don’t be surprised when it comes to that. The Dems are already discussing taxing ‘wealth’ (see Pocahontas Warren), not just income. And wealth has already been taxed.
Socialists should be required to actually live in a Socialist country before deciding to destroy our ‘free’ country with Socialism.
One way I was expecting was to say that we are too risky with our retirement accounts and force us to put a portion in something safe like US government bonds. Forcing us to lend them half of our 401ks and IRAs is almost as good for them as taxing them outright, and probably a lot safer politically.
Ah. There’s the reason RINO and social-democrat communists support it! 401K money can then go to annuities, which are money-makers for Wall Street.
There are some folks (I’m not one of them) who just don’t think they have the chops for managing money and just want to be “guaranteed” an income stream for the rest of their lives.
You can show them spreadsheets and calculations on how they could get reasonable income and keep the principal, but they don’t want to hear it. All they’re looking for is the “guarantee.”
RMD’s are in no way a financial planning tool
No, but they have to be dealt with in one’s overall financial plan. For people who are petrified of outliving their money and don’t/can’t do arithmetic, an annuity is something to consider.
For me, no way, no how. I would counsel anyone who asked me to avoid annuities. A balanced portfolio, long term, will throw off almost as much income as an annuity, allow you to keep the principal for your heirs, and provide for a little growth.
How many people who win the lottery take the annuity instead of the lump sum, when the lump sum is the better choice?
Another factor is the emotional impact. Some folks CANNOT manage a stash of money. It burns a hole in their pocket. If they have it, they got to spend it all. For those folks, an annuity removes the temptation to spend their nest egg.
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