Senators Reintroduce Retirement Security & Savings Act

The latest congressional bill seeking to help bolster Americans’ retirement savings is the Retirement Security & Savings Act, which is intended to allow people to save more and help small businesses offer 401(k)s and other retirement plans, among other provisions.

The bill was introduced by US Sens. Ben Cardin, D-Maryland, and Rob Portman, R-Ohio, and comes a week after Sens. Chuck Grassley, R-Iowa; Maggie Hassan, D-New Hampshire; and James Lankford, R-Oklahoma, introduced the Improving Access to Retirement Savings Act. And earlier this month, the House Ways and Means Committee unanimously passed the Securing a Strong Retirement Act of 2021, also known as the “SECURE Act 2.0.”

Cardin and Portman have introduced the Retirement Security & Savings Act, also known as the Portman-Cardin bill, in previous sessions of Congress.

The bill seeks to create an incentive for employers to offer a more generous automatic enrollment plan and receive a safe harbor from expensive retirement plan rules. It also provides a tax credit for employers that offer safe harbor plans starting at 6% of pay in addition to the existing safe harbor at 3%. And for retirees who have fallen behind in their retirement savings, the bill would increase “catch-up” contribution limits to $10,000 from $6,000 for individuals with 401(k) plans who are older than 60.

Additionally, the proposed legislation would seek to help employees trying to save for retirement while paying off student loans by allowing employers to make a matching contribution to workers’ retirement accounts based on their student loan payment.

It would also establish a three-year, $500 per-year tax credit for small businesses that automatically re-enroll plan participants into the employer plan at least once every three years, and it would expand the eligibility of 401(k)s to include part-time workers who complete between 500 and 1,000 hours of service for two straight years.

“This bipartisan legislation includes sweeping reforms to help Americans save more for retirement by allowing people who have saved too little to set more aside for their retirement, helping small businesses offer 401(k)s and other retirement plans, expanding access to retirement savings plans for low-income Americans without coverage, and providing more certainty and flexibility during Americans’ retirement years,” Portman said in a statement.

The senators cited a Government Accountability Office (GAO) report that said nearly half of all near retirees over the age of 55 have no retirement savings, and a Bureau of Labor Statistics (BLS) survey that found only 49% of private-sector workers at the smallest businesses and 39% of part-time workers have access to an employer-sponsored plan. They also said only 22% of low-income workers currently participate in a retirement plan.

The bill is supported by the American Benefits Council, AARP, and the Insured Retirement Institute (IRI), among several other associations and institutional investors, including T. Rowe Price, Vanguard, and TIAA.

Other provisions in the bill include:

Allowing employers to make an additional contribution on behalf of employees in a small business SIMPLE [savings incentive match plan for employees] retirement plan;

Indexing to inflation the allowable catch-up contribution to individual retirement accounts (IRAs);

Increasing the current law tax credit for the smallest businesses starting a new retirement plan to a larger percentage of their costs;

Simplifying rules for small businesses to reduce the cost of enrolling new employees; and

Creating a national, online database of lost accounts.