Significant Changes to Retirement Plans Proposed

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As of April 2, 2019, there are two bills rapidly moving through Congress with bipartisan support. The Setting Every Community Up for Retirement Enhancement Act of 2019 (“SECURE”) passed the House and the Senate has proposed the Retirement Enhancement Security Act of 2019 (“RESA”). The bills are very similar and because there is bipartisan support it is likely that something will be passed soon.


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Some of the proposed changes are as follows:
1. Encourage employees to participate in automatic contributions in 401(k) plans and require employers to provide estimates of how much an employee’s account would provide employees if it were invested in an annuity.
2. Make it easier for small employers to join other employers in multiple-employer plans.
3. Easing nondiscrimination rules for frozen defined benefit plans.
4. Adding a safe harbor for selecting lifetime income providers in defined contribution plans.
5. Increase the automatic enrollment safe harbor cap from 10% to 15%.
6. Require employers to allow long time, part time employees to participate in their 401(k) plans.
7. SECURE would change the required minimum distribution age that distributions must begin from age 70 ½ to 72 years old. RESA does not include this provision.

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