On the heels of House Ways and Means Chairman Richie Neal (D-Mass.) and Ranking Member Kevin Brady’s (R-Texas) introduction of the Securing a Strong Retirement Act (SSRA) of 2021, Senators Ben Cardin (D-Md.) and Rob Portman (R-Ohio) recently unveiled their comprehensive 59-provision bill, the Retirement Security and Savings Act (RSSA) of 2021.
The Senate bill contains numerous provisions included or similar to those in the House bill that leverage and build upon the current, successful retirement system. The bill works to solve common challenges that retirement savers face, challenges that are even more pressing in the aftermath of COVID-19.
Many are working to recoup savings that were drawn down to pay bills or because of pandemic-related loss of employment. Provisions in the bill that help those at or close to retirement include increasing the required minimum distribution (RMD) age to 75 in a series of steps and increasing the annual catch-up provision for retirement plan contributions to $10,000 for those over 60.
The bill also improves the Saver’s Credit by making it fully refundable and directing the credit into a retirement plan or IRA. It also provides incentives for small businesses to implement a plan in the workplace, and it creates a safe harbor for employers that automatically enroll employees and auto escalate their contribution rates every year. Cardin and Portman’s legislation will ensure more workers have access to a retirement plan in the workplace, and it will also help workers more effectively increase their savings balances.
Cardin and Portman not only focus on the accumulation of savings, but also on an equally important consideration – ensuring retirement savings last throughout retirement. Important changes will facilitate the use of qualifying longevity annuity contract (QLACs), a savings option that guards against outliving ones’ savings. The bill expands QLAC options, clarifies spousal rights and simplifies and raises the QLAC purchase limit.
Senate action in the retirement security space indicates the chamber’s desire to address legislation that is bipartisan and has the potential for further action this year. This is great news for retirement savers!
Kathleen Coulombe serves as the Senior Vice President, Federal Relations, for the American Council of Life Insurers (ACLI). In this capacity, she is actively involved in a multitude of public policy issues on Capitol Hill that impact the life insurance industry.
