Chairman of the House of Ways and Means Committee Richard Neal.
Matt Stone | Boston Herald Getty Images
The Household Funds Committee is ready to consider a bill Wednesday that would change the way American workers save for retirement.
The measure, known as the Strong Pension Act of 2021
“Retirement issues have a bipartisan legacy that continues with Neil-Brady legislation,” said Wayne Chop, president and CEO of the Retirement Insurance Institute. “We are confident that Congress will act quickly to help more people build economic justice and strengthen financial security to sustain them during the retirement years.”
Among the provisions included in the new bill, which is similar to the version released last year by Neil and Brady, is gradually increasing the age at which people must start taking the necessary minimum distributions from their pension accounts by the age of 75 from 72 ( security has been changed to 72 out of 70½) and requires most companies that open a new 401 (k) plan (or similar workplace option) to automatically enroll their employees.
“Over time, we’ve learned … that people who are automatically enrolled are much more likely to stay in the plan,” said Melissa Kahn, managing director of retirement policy at State Street.
The bill will also index to inflation the “catch-up” contributions that people aged 50 and over can make to their pension accounts (an additional $ 6,500 for 401[k] plans and $ 1000 for the IRA). And this would increase these compensation amounts for people between the ages of 62 and 64, as well as allow workers to receive 401 (k) corresponding contributions (from employers) when paying off student loan debt, instead of contributing to their pension. saving account.
In addition, some restrictions on qualified annuity contracts will be removed. Currently, the maximum that can go into QLAC is either $ 135,000 or 25% of the value of your retirement accounts, whichever is less. The account will remove the 25% limit.
“Today, you’re kind of limited in how much you can invest in QLAC,” Kahn said, adding that lifting the limit would allow people with high account balances to reach that $ 135,000 mark.
The new measure is expected to be voted on during the session of the Marking Commission on Wednesday, when it can be amended or adopted or killed. If the bill goes beyond the committee, it will be scheduled for a full vote in Parliament, although the timing is uncertain.