The U.S. Senate Health, Education, Labor, and Pensions (HELP) Committee has drafted a retirement savings bill that, while it’s touted as “building off of” three House bills, doesn’t include an automatic retirement savings provision that the House previously approved.
A summary of the “Retirement Improvement and Savings Enhancement to Supplement Healthy Investments for the Nest Egg (RISE & SHINE) Act of 2022” states those House bills are the “Retirement Improvement and Savings Enhancement Act (RISE Act),” the “Retirement Security & Savings Act, and the “Securing a Strong Retirement Act of 2021 (SECURE 2.0). Secure 2.0 was passed in March with only five no votes.
Under SECURE 2.0, employers would be required to automatically put 3% of eligible workers’ pay in 401(k) plans and increase the contribution every year until at least 10% is reached with the option of up to 15%. That’s not the case with RISE & SHINE. Instead, the new bill prompts employees who have opted out of retirement savings plans to reconsider their choice at least every three years.
“This would lead to more workers participating in employer-sponsored retirement plans and benefiting from employer matches during their careers,” the bill summary states.
Employers will still be required, as they are currently, to send annual eligibility notices to unenrolled employees “to encourage participation in the workplace retirement plan.”
Tagged as a “broad, bipartisan retirement package” in a HELP news release, the bill would also:
- Allow 403(b) retirement plans, which are generally sponsored by charities, educational institutions, and nonprofits, to participate in multiple employer plans (MEPs) and pooled employer plans (PEPs);
- Reduce the requirement for part-time workers to participate in an employer’s retirement savings plan from three years of service to two years; and
- Provide employers the option to offer pension-linked emergency savings accounts.
Employees can automatically opt into the emergency savings accounts at no more than 3% of their salary. The accounts are capped at $2,500 and can be capped at a lower amount set by the employer.
“Contributions are made post-tax and are treated as elective deferrals for purposes of retirement matching contributions,” the bill summary states. “Once the cap is reached, the excess emergency savings contributions return to retirement plan savings.”
“The COVID-19 pandemic was exactly the kind of crisis millions of families simply could not afford,” said Committee Chair Senator Patty Murray (D-WA), in the release. “Families across Washington state were forced to raid their retirement savings to pay for groceries, pay their mortgage, and just to make ends meet. And this crisis has been even harder on the countless people who have never had access to a retirement plan, and have never even been paid enough to make ends meet — let alone save for their futures.
“We need to put families back on solid financial footing and use the tools we know work to help people put more money in their savings and retirement accounts—which is why this bipartisan package is so important. I look forward to continuing to work with Senator Burr and our colleagues to pass this package and improve the financial security of workers, retirees, and families across the country.”
Ranking Member Sen. Richard Burr (R-NC) added that he’s proud to release the discussion draft — a step taken before a bill is introduced on the floor with a bill number. Senators Murray and Burr plan to introduce final legislation in the coming weeks, according to the release. And they’re looking for feedback on the draft, which must be submitted by June 2 via email to RiseAndShine@help.senate.gov.
“The recent historic inflation for everyday essentials, like groceries and gas, reinforces the importance of financial planning and saving,” Burr said. “That’s why I’m proud to work with my colleagues on this retirement package, which builds off of many bipartisan proposals to enhance Americans’ access to retirement plans, strengthen the ability of small businesses to offer plans to their employees, and improve overall savings for retirees’ golden years. I look forward to working with the Committee to further improve this discussion draft with significant and practical long-term retirement solutions.”
At the state level, Hawaii could become the latest to require private-sector employers to offer retirement plans. In recent years, 14 states have passed laws that require retirement plans to be offered. Most state plans are aimed at small businesses that have five to 100 employees.
Collision industry employers nationwide can also consider the Society of Collision Repair Specialists’ 401(k) Multiple Employer Plan (MEP) as an option in addition to the state program that may be offered.
SCRS 401(k) plan advisors interview plan providers, come up with a plan and spend time making sure law compliance is reached taking all of that extra responsibility off of shop owners.
To learn more about SCRS’ 401(k), visit scrs.com/401k or contact plan advisor Coley Eckenrode at 804-327-0425 or email@example.com. Plan advisor Scott Broaddus can also be reached at 804-327-0424 or firstname.lastname@example.org.
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