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Retirement is calling

Congress Reintroduces Retirement Plan Proposals

Alli Thomas

Senators Cory Booker (D-NJ) and Senator Todd Young (R-IN) recently reintroduced a set of four proposed laws aimed at helping families and individuals with retirement planning.

Here’s what you need to know about them.

Strengthening Financial Security Through Short-Term Savings Account Act

This bill would allow employers to use auto-enrollment to set up short-term emergency savings accounts for their employees.

According to the proposal, the accounts would have no minimum balance requirements, reasonable fees and a maximum account balance of $10,000.

The money in the account would be readily available to the account owner during their tenure with the employer. It would also be available to withdraw in full within five business days following the employee’s termination.

This bill is aimed at helping prevent workers from taking early withdrawals from their qualified employer-sponsored retirement plan, which typically come with hefty tax penalties.

Refund to Rainy Day Savings Act

This proposal would allow taxpayers to earmark 20% of their annual tax refunds for a “rainy day” savings account that invests in short-term Treasury bills.

This bill’s intent is to help Americans build emergency savings, citing the fact that 40% of U.S. families don’t have enough saved to cover an unexpected $400 expense.

Retirement Security Flexibility Act

This bill proposes to change the current auto-enrollment contribution rate to at least 3% but no more than 10% of employee pre-tax earnings.

Another feature of the proposal is that it simplifies automatic step-up contribution increases for employers.

Commission on Retirement Security Act

This bill proposes the creation of a federal commission tasked with evaluating private retirement benefit programs and making recommendations on how to improve them based on its findings to Congress.

One thing to note about these proposals is that many of them echo those outlined in the SECURE Act 2.0, which we talked about a few months ago, and the Retirement Security and Savings Act (both of which were introduced to Congress in May 2021). Insiders say that these proposals are expected to become the foundation of new retirement security laws that may gain ground later this year.

The Clock is Ticking

With only a few months left in 2021, now is a good time to review your retirement portfolio, make adjustments, and solidify your plan for 2022. If you’d like some help – or just a second opinion – click here to schedule a free, no-obligation meeting with one of our advisors.

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