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Retirement savings plan changes could be coming after House passes new bill

The bill could allow Americans to save for retirement longer by changing age requirements

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The House of Representatives passed a bill that could help Americans improve their retirement savings plans.  (iStock)

The House of Representatives passed a new bill last week that could change the way Americans save for retirement.

The House passed H.R. 2954, the Secure Act 2.0, in a bipartisan vote of 414 to five on March 29. The bill was then sent to the Senate, where it was read twice and referred to the Committee on Finance.

"After a lifetime of hard work, no American should face financial uncertainty in their old age," Rep. Richard Neal (D-Mass.), who introduced the bill, said in a statement. "This bipartisan legislation will make it easier for workers to save and plan for their futures. In advancing this measure, we build on the positive impact of the SECURE Act and continue expanding opportunities for Americans to plan for their golden years. I hope the Senate follows our lead and swiftly sends this widely-supported measure to President Biden’s desk."

Rep. Kevin Brady (R-Texas), who introduced the bill alongside Neal, also applauded its passage, saying it will enable more workers to start saving earlier and give them peace of mind in their plans for the future.

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Legislation could bring significant changes to retirement saving

The new bill would bring about several changes to the way Americans save for retirement. For example, it would promote saving earlier by expanding automatic enrollment for employee contributions into 401(k) plans and 403(b) retirement plans. The bill would require employers to enroll their employees at an automatic 3% of their annual income, which would increase each year until hitting 10%. Employees would have the option to opt out of this plan.

Not only could the bill allow Americans to start saving for retirement sooner, but it also allows them to save longer. The bill would increase the required minimum distribution age from 72 to 73 in 2022, 74 in 2029 and 75 by 2032.

Among some of the legislation’s other changes are: 

  • It improves coverage for part-time workers' 401(k) retirement savings plans.
  • It allows employers to match an employee's student loan payments through contributions to their retirement savings account.
  • It expands the amount that individual investors are allowed to have in their retirement plan's contribution limit, especially as they get older.

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Social Security retirement age could soon rise

Alongside the upcoming changes to retirement savings, the Social Security age increased once again in 2022 for some individuals, marking the last change that's currently planned. The full retirement age rose to 67 for those born in 1960, and workers can begin collecting Social Security payments as soon as age 62.

A bill that seeks to protect future Social Security benefits was introduced in October 2021. "Social Security 2100: A Sacred Trust," authored by House Ways and Means Social Security Subcommittee Chairman John B. Larson (D-Conn.), would provide a benefit bump, protect low-income workers and also protect older retirees against inflation.

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