Hope for SECURE in Year-End Funding Package

The most significant piece of retirement legislation in a decade could become a reality, after all.

Hill staff worked throughout the weekend to put the finishing touches on the nearly $1.4 trillion spending bill for FY 2020, which will likely be the last “legislative vehicle” for 2019 – and things look promising for the Setting Every Community Up for Retirement Enhancement (SECURE) Act to be attached to that spending bill.
 
“As of right now, things look likely that SECURE will be in the year-end funding package that Congress must pass in order to keep the federal government running,” noted Brian Graff, CEO of the American Retirement Association, who was tracking progress on the negotiations throughout the weekend.

Congress has a Dec. 20 deadline to approve the spending bill to avert another government shutdown. The federal government’s fiscal year for 2020 began Oct. 1, but since the annual funding bills had not been completed, lawmakers have been forced to pass temporary funding measures; the previous extension expired Nov. 21.

The legislation includes provisions that significantly increase the tax credit for new plans from the current cap of $500 to a more realistic $5,000, and small employers that implement an automatic enrollment feature in their retirement plan design also would be eligible for an additional $500 credit. Moreover, the SECURE Act eases the existing rules restricting multiple employer plans (MEPs) to allow two or more unrelated employers to join a pooled employer plan, producing economies of scale that can expand access and lower both employer and plan participant cost. The legislation would also: 

• simplify the 401(k) safe harbor rules;
• expand portability of lifetime income options;
• allow long-term part-time workers to participate in 401(k) plans;
• allow plans adopting by the filing due date to be treated as in effect as of close of year;
• provide a fiduciary safe harbor for selection of a lifetime income provider;
• modify the treatment of custodial accounts on termination of 403(b) plans;
• extend the current required minimum distribution requirements to age 72;
• require disclosures regarding lifetime income; and
• modify the nondiscrimination rules to protect longer-service participants.

“We are continuing to press the issue, and could know for sure within hours,” Graff said.