Susan Neely (Photo: ACLI)
Life insurance and annuity industry groups today celebrated the unveiling of the new version of the âRetirement Enhancement and Savings Actâ bill.
House Ways & Means Committee Chairman Richard Neal joined with both Democratic colleagues and Republican colleagues to introduce the âSetting Every Community up for Retirement Enhancement Act of 2019âł bill.
The first RESA bill surfaced in Congress in 2016. In late, 2018, Congressional appeared to be close to rushing another version of the RESA bill provisions to passage, as part of a must-pass spending bill. The effort to pass the RESA provisions in 2018 fell through.
The new successor to the RESA bill, the SECURE Act bill, brings back RESA retirement savings incentive provisions, such as a safe harbor that employers can use when theyâre choosing group annuity issuers to support 401(k) plan lifetime income stream options.
The bill would alsoÂ create a tax break aimed at employers that set up retirement plans with an automatic enrollment feature.
Some provisions in the new SECURE Act bill come from the âFamily Savings Actâ bill.
In addition to Neal, who is a Democrat from Massachusetts, the lead sponsors of the bill are Rep. Ron Kind, D-Wis.; Rep. Kevin Brady, R-Texas; and Rep. Mike Kelly, R-Pa.
The Insured Retirement Institute and the American Council of Life Insurers have already been actively promoting the bill.
Susan Neely, the president of the ACLI, writes in a letter in support of the SECURE Act bill that the ACLI is leading âa broad coalition of industry leaders and retirement stakeholders who stand ready to assist and support your efforts to pass this important legislation.â
Action is especially important, given that 10,000 Americans turn 65 every day, and many will live 30 or more years in retirement, Neely writes.
The Association for Advanced Life Underwriting â AALUÂ â is supporting the SECURE Act bill, just as it has supported the RESA bills in the past.
AALU is also joining the ACLI and other life and annuity groups in supporting another Neal retirement legislation project: the âAutomatic Retirement Plan Actâ bill, or ARPA.
The ARPA bill would require employers with more than 10 employees to offer a way for employees to contribute to a 401(k) plan or an individual retirement account through a payroll deduction mechanism. The bill would also provide plan startup tax credits.
Neal introduced an ARPA bill in 2017, and AALU says it expects him to reintroduce that bill this year.
For bipartisan retirement savings bills, the main obstacle to passage is usually finding ways to pay for bill tax breaks.
The current version of the SECURE Act bill includes four pay-fors.
One is a change in the required distribution rules for the beneficiaries of 401(k) plan participants who die. That provision could put retirement savers in opposition to the interests of the widows and orphans of workers who die young.
A second pay-for could increase collection of heavy use vehicle excise taxes by increasing information sharing between the Internal Revenue Service and U.S. Customs and Border Protection . This provision could put financial services providers in conflict with trucking companies.
A third pay-for provision would increase the penalty for taxpayers who fail to file their taxes, and a fourth wouldÂ increase the penalties for retirement plans that fail to file retirement plan returns.
A summary of the new bill is available here.
The text of the bill is available here.
â ReadÂ House Panel OKs Retirement Bill That Leaves Life Insurers Hungry,Â on ThinkAdvisor.