The Gift That Will Keep On Giving

During the holiday season, Americans received a gift that will keep on giving for decades to come.

When Congress passed and President Biden signed SECURE 2.0 legislation into law just before New Year’s Eve, millions of workers across the nation received new opportunities to achieve a financially secure retirement.

Life insurers strongly supported the passage of this multifaceted legislation, which addressed several gaps that had been preventing some people from participating in workplace retirement plans. Some of the prominent provisions in SECURE 2.0 will:

• Improve the Saver’s Credit to encourage utilization among low- and middle-income earners by making it refundable, so those without federal tax liability would be able to claim the credit and contribute it to a retirement plan or Individual Retirement Account.
• Help part-time workers by shortening the time needed on the job to become eligible to access workplace retirement plans.
• Assist student loan borrowers by enabling employers to contribute matching funds to an employee’s 401(k) account in the amount that of the employee’s student loan repayments.
• Provide a tax credit to small employers for three years if they make military spouses eligible for their retirement plan within two months of hire and provide matching or non-elective contributions to the plan while ensuring that spouses are 100 percent vested in all employer contributions within the same period.
• Update requirements so that new 401(k) and 403(b) plans must include automatic enrollment with a default rate of between 3% and 10%, as well as automatic escalation of 1% per year up to a maximum of at least 10%, and no more than 15%.
• Amend rules making it easier for retirement plan participants to access Qualified Longevity Annuity Contracts, which provide guaranteed income later in life.
• Help people working later in life by increasing the required minimum distribution age from 72 to 75 and allowing higher catch-up retirement contributions for those nearing retirement age.
• Revise the eligibility requirements for the tax-favored savings program to benefit disabled individuals, known as a qualified ABLE program, to permit the inclusion of individuals who become blind or disabled before age 46, rather than 26.

Many retirees can expect to live more than 30 years or longer after they stop working. SECURE 2.0 will provide millions of Americans with greater access to retirement savings tools that will help them better prepare for their golden years. An ACLI analysis of a revenue estimate of the legislation by the Joint Committee on Taxation shows that SECURE 2.0 will result in billions of dollars in increased savings by Americans.

SECURE 2.0 will help more people retire with peace of mind by increasing the availability, accessibility and affordability of retirement security options. It truly is the gift of a lifetime.