SECURE ACT Retirement Security Reforms Championed by Portman Ready To Be Signed Into Law
Bipartisan Measure – Which Includes Key Portman Retirement Security Priorities – Will Help More Americans Save for Retirement
WASHINGTON, DC – U.S. Senator Rob Portman (R-OH) today announced the Setting Every Community Up for Retirement Enhancement (SECURE) Act passed the Senate as a part of the final FY 2020 funding bill and will be signed into law. The SECURE Act includes reforms sponsored by Portman designed to help more Americans save for their retirement, including marquee provisions to encourage small businesses to offer retirement plans to their workers, ensure millions of part-time employees can access 401(k) plans, and increase the age for required minimum distributions from 70 and a half to 72. The SECURE Act also includes Portman’s Retirement Security Preservation Act, which would reform pension nondiscrimination laws to prevent more than 400,000 Americans from having their pensions frozen in January. Additional provisions in the bipartisan Retirement Security & Savings Act, which Portman introduced with Senator Ben Cardin (D-MD), are also included in the SECURE Act. The legislation now heads to the president’s desk for signature.
“Passing the SECURE Act is a big victory that will help ensure that all hard-working Americans have a chance to build a nest egg for their retirement. Many of the provisions in the SECURE Act have been under consideration by the Senate for multiple years and multiple sessions of Congress, dating all the way back to the Senate Finance Committee markup in 2016. I’m particularly pleased that this legislation includes legislation I’ve introduced to help protect the retirement security of hundreds of thousands of dedicated older Americans who are at risk of losing future retirement benefits this year. It also includes two provisions I’ve championed to help expand access to 401(k)s and allow individuals choosing to work later in life to keep saving for retirement. I look forward to the president signing this legislation into law quickly to strengthen the retirement security of the American people.
“There is still more that we can do to help more Americans save for their retirement. I believe that passage of the SECURE Act can help pave the way for bolder reforms in legislation I have introduced with Senator Cardin called the Retirement Security and Savings Act. I believe the Senate Finance Committee should hold hearings and a markup on this legislation, and I will work closely with Senator Cardin to move it forward.”
NOTE: Portman’s Retirement Security Preservation Act (RSPA), is an urgent provision which would provide permanent relief from outdated pension rules to protect more than 400,000 older, longer-service participants in closed defined benefit plans that are at risk of losing pension benefits by the end of this year. Many companies facing long-term pension liabilities have soft-frozen their single-employer pension plans – that is, they grandfathered existing employees into the existing defined benefit plan, while creating a new defined contribution plan (such as a 401k) for new workers. Unfortunately, today’s outdated pension non-discrimination rules – which were originally meant to ensure that all employees are treated equally – were inadvertently written to eventually punish companies for trying to keep good, defined benefit pension benefit plans in place for longer-service employees. The current but outdated pension rules almost inevitably will result in any soft-frozen plan becoming “discriminatory,” and force companies to hard-freeze their pension, which means that longer-service employees must stop accruing pension benefits immediately. So instead of helping older workers and strengthening their retirement security, these outdated pension rules punish them. The measure was approved unanimously by the Senate Finance Committee as part of a retirement-related legislative package in September 2016.
Several provisions from Portman’s Retirement Security & Savings Act (S. 1431) are in the bill, including provisions to (1) expand the eligibility of 401(k)s to include part-time workers that complete between 500 and 1,000 hours of service for multiple years; and (2) increase the age for required minimum distributions from age 70.5 to age 72 in 2020, allowing all individuals choosing to work later in life to keep saving for retirement. The Retirement Security & Savings Act, which was introduced by Portman and Senator Ben Cardin (D-MD) last week, would raise the age for required minimum distributions to age 72 in 2023 and to age 75 by 2030. The Retirement Security & Savings Act includes a broader set of reforms – 57 specific provisions – designed to help more Americans save for their retirement. A link to the bill text is here.