House Committee Passes Retirement Reform Measure

Employee Relations, Inclusion and Diversity

The House Ways and Means Committee unanimously passed a bill that would increase the required minimum distribution age from 70.5 to 72 and require companies with long-term part-time workers to allow them to become eligible for retirement benefits.

The measure would: 

• Require employers maintaining a 401(k) plan to have a dual eligibility requirement under which an employee who has worked less than 1,000 hours but more than 500 over the course of a year must complete one year of service requirement or three consecutive years of service where the employee completes at least 500 hours of service;
  
  
• Allow penalty-free withdrawals from retirement plans for any “qualified birth or adoption distributions”;
  
  
• Modify the nondiscrimination rules with respect to closed plans to permit existing participants to continue to accrue benefits; and
  
  
• Increase the required minimum distribution age from 70.5 to 72, among other items.

Committee Chairman Richard Neal (D-MA) said, “Americans currently face a retirement income crisis, with too many people in danger of not having enough in retirement to maintain their standard of living and avoid sliding into poverty.”

Looking ahead:  As the workforce ages, retirement reform has become an increasingly hot issue.  The bill, which enjoys bipartisan support, has a strong chance of becoming law.