The most comprehensive changes to private retirement plans in more than a decade are gaining momentum in Congress, according to media reports.
The House Ways and Means Committee this week unanimously passed the Secure Act, which increases the flexibility of 401(k) plans and improves access to the accounts, particularly for small businesses and their employees.
The Secure Act:
- Creates a new tax credit of up to $500 per year to employers to defray startup costs for new section 401(k) plans and SIMPLE IRA plans that include automatic enrollment;
- Repeals the maximum age for IRA contributions and raises the age for required mandatory distributions from 70½ to 72; and
- Allows long-term, part-time workers to participate in 401(k) plans.
The Senate Finance Committee introduced a companion bill late Monday. It is expected to pass with backing from both sides of the aisle.
“There’s a lot of pent-up momentum for this, and that’s why it’s so bipartisan in nature,” Shai Akabas, director of economic policy at the Bipartisan Policy Center, told CNBC.com reporter Ylan Mui. “They’re now getting to the point where there’s momentum to get it across the finish line in both the House and the Senate.”