House-Passed Retirement Savings Bill Includes Changes for Employer-Sponsored Plans

The U.S. House of Representatives passed a bill that would require automatic enrollment in new employer retirement plans, increase the age at which individuals must start drawing on their retirement accounts, increase the annual limit on catch-up contributions to employer plans, and allow employers to make matching contributions to retirement accounts based on employee student loan payments. 

The Securing a Strong Retirement Act (H.R. 2954) (also known as Secure Act 2.0) includes several provisions of interest to HR Policy Association members:

• Automatic enrollment in retirement plans: Beginning January 2024, employers who implement new retirement plans, including 401(k) and 403(b) plans, would be required to automatically enroll all eligible employees with a contribution rate of at least 3% in the first year, increased annually until the employee is contributing 10% of their pay (but not more than 15%). Employees could opt out or select a different contribution amount. The provisions would not apply to plans established before the bill’s enactment.
  
  
• Increased age for required minimum distributions: The bill would increase the age at which individuals are required to begin taking minimum distributions from their retirement plans from 72 to 73 starting in 2023, 74 starting in 2030, and 75 starting in 2033.
  
  
• Increased limit for catch-up contributions: The measure keeps the existing catch-up contribution limits for those aged 50 but increases the annual limit on catch-up contributions to $10,000 (up from the current $6,500) for individuals aged 62 through 64. The amounts would continue to be adjusted for inflation.
  
  
• Allow employers to match student loan payments: The measure would allow employers to contribute a matching amount to an employee’s retirement plan for those that are making payments on student loans, equal to the amount of the loan payments. The eligible payments cannot exceed the limit on employee contributions to retirement plans for the year.

Beyond the above provisions, the legislation will require employers to provide paper statements at least once a year to all retirement plan participants and creates a national database at the Department of Labor for workers and retirees to reclaim lost retirement accounts. H.R. 2954 builds on the first Secure Act, which was enacted in 2019.

Outlook: The bill passed the House with a strong bipartisan vote of 414 to 5 and now heads to the Senate. Meanwhile, the Senate is considering its own version of Secure 2.0, the Retirement Security and Savings Act, which includes many similar provisions to the House-passed bill. As the Senate legislative process moves forward, lawmakers may try to incorporate proposals in the separate House and Senate bills. If the Senate passes its own version of a Secure 2.0 bill, both chambers would then have to reconcile their separate versions and agree on a final package.