House-passed Secure Act to improve retirement savings hits wall in the Senate

Despite the political distractions engrossing the media as of the past several months, it seems there are several pieces of Social Security and retirement legislation making huge progress in Congress.

Along with the Social Security 2100 Act and the TRUST Act we talked a little about yesterday, there is another bill quietly making progress through the legislative process.

That bill is called the Secure Act, short for “Setting Every Community Up for Retirement Enhancement.”  It was introduced by Representative Richard E. Neal (D-MA) in March of this year.

While the 2100 and TRUST Acts focus on improving and repairing Social Security, the Secure Act seeks to change the entire way Americans save independently for retirement.

The Secure Act is an extensive bill.  If passed, it would become the largest overhaul to retirement policy since 2006.  But all the provisions made in the bill amount to encouraging Americans to save more during their working years.

A few of its provisions include:

Increasing the cap on automatic contributions to pension plans from 10% to 15%

Repealing the prohibition on those age 70.5 and older making contributions to a traditional IRA

Increasing the age at which one must take mandatory distributions from retirement plans from 70.5 to 72

Makes long-term part-time employees eligible for participation in employer retirement plans.

Along with these, the bill incentivizes small businesses to offer their employees retirement plans.  These businesses would receive a tax credit for plan startup costs.

But the bill is not without criticism.  In order to offset the costs of implementation, stretch IRAs would be eliminated completely.

Currently, the SECURE Act has progressed the farthest of any current retirement-related legislation.  In a landslide vote, the House of Representatives voted to pass the bill.  It now rests with the Senate to consider.