The bill, which builds on the SECURE Act and includes several provisions advanced by the American Retirement Association, now goes to the House floor for a vote.
The Ways & Means Committee approved the Securing a Strong Retirement Act of 2021 (H.R. 2954) on May 5 by a unanimous voice vote. Other than a manager’s amendment that made technical clarifications to the underlying bill, no additional amendments were offered during the markup.
What’s in the SSRA?
To make it even easier for small businesses to adopt and maintain workplace-based retirement savings plans, one of the key provisions of the SSRA is to increase the small employer pension plan start-up credit to cover 100% of the cost to small employers to implement a 401(k) plan for the first three years. The SSRA also creates an additional new credit to encourage small employers to make direct contributions to their 401(k) plan for their employees, offsetting up to $1,000 of these employer contributions for each participating employee.
In addition, it expands automatic enrollment in 401(k) plans by requiring 401(k), 403(b) and SIMPLE plans to automatically enroll participants in the plans upon becoming eligible, with the ability for employees to opt out of coverage. Among the specific provisions championed by the ARA include:
- giving employers more time to adopt beneficial discretionary retirement plan amendments up until the due date of the employer’s tax return;
- reforming the family attribution rules by modernizing the current tax law that penalizes small businesses in community property states and disproportionately affects women business owners; and
- broadening the scope of the SECURE Act’s pooled employer plan or open multiple employer plan provisions to allow unrelated public education and other non-profit employers to join a single 403(b) plan.
For information on the other key provisions in the legislation and links to other resources, click here.
While the ARA offered strong support for the legislation in a May 3 letter to Neal and Brady, the organization remains concerned about a provision that would require at least one participant benefit statement be mailed in a paper format given the impact on the environment as well as plan costs. “The ARA will continue to work with Congress on ways to ensure retirement plan participants are effectively accessing the required disclosures. But on balance the Securing a Strong Retirement Act builds upon the success of the workplace-based retirement system and is yet another example of the extensive history of bipartisan legislating in this critical policy area,” the letter states.
During the markup, some committee members expressed hope that a couple of provisions that were dropped from the October 2020 bill, including ones to expand the Saver’s Credit and defer tax for certain sales of employer stock to ESOPs sponsored by S corporations, would be addressed in future legislation. (For more information on these two provisions, click here.)
Brady acknowledged that the two provisions were dropped because of their associated revenue costs, and pledged to continue working on a solution. “I think there is a role for the Saver’s Credit going forward; I know there’s a bigger role for ESOPs going forward; there are a number provisions that had a significant score that, as we monitor the impact and results of this bill today as it becomes law, I and other members look forward to working with you, Mr. Chairman, and our Democrat colleagues in continuing to work and fine tune help where we can in these areas,” he said.
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