Retirement Industry Lauds Inclusion of SECURE 2.0 in Omnibus
Retirement policy groups are praising the inclusion of over 92 retirement provisions known as SECURE 2.0 in the eleventh-hour $1.7 trillion omnibus spending bill released December 20.
“We are grateful to the many members of Congress and staff who worked tirelessly to get SECURE 2.0 included in the omnibus legislation expected to be enacted this week,” Brian Graff of the American Retirement Association said in a December 20 release.
Graff added that the bipartisan package “will enhance the retirement security of tens of millions of American workers — and for many of them give them the opportunity for the first time to begin saving.”
The association highlighted the legislation’s proposed saver’s match program, which would provide a 50 percent federal matching deposit of retirement plan or IRA contributions up to $2,000 per taxpayer. The bill also includes a provision that would direct the Treasury Department to increase public awareness of the saver’s match program.
“Including SECURE 2.0 retirement provisions in the last major legislation of the year means that Congress is poised to help millions more workers and retirees with significant improvements to the nation’s private retirement system,” Paul Richman of the Insured Retirement Institute said in a statement.
Other top proposed retirement provisions include an expansion of retirement plan automatic enrollment, increased catch-up limits for ages 60-63, greater access to emergency expense withdrawal options, and an enhancement of section 403(b) plans.
The institute noted that some groups whose retirement savings efforts will benefit greatly through the proposed retirement provisions include low-income workers, employees with student loan debt, small business workers, part-time workers, and military spouses.
The retirement title in the 4,155-page omnibus bill includes a proposal to treat student loan payments as eligible for matching employer contributions to retirement accounts, a tax credit for small employers who make military spouses immediately eligible for plan participation, the ability for employers to offer de minimis financial incentives for making plan contributions, and improving section 401(k) coverage for part-time workers.
“SECURE 2.0’s common-sense, wide-reaching measures will continue the much-needed evolution of America’s private retirement system, further providing access to retirement plans regardless of where workers are in their financial preparation journey,” Thasunda Brown Duckett of the Teachers Insurance and Annuity Association said in a release. She urged Congress to “swiftly unite on this bill” and pass it before the end of the year.
However, not all of the proposed retirement provisions have been met with approval. Sharon Parrott of the Center on Budget and Policy Priorities said in a statement that some provisions “expand existing unnecessary and regressive tax subsidies for people nearing or deep into retirement.”
Parrott highlighted a provision that would increase the age for required minimum distributions to 75, explaining that under the proposal, wealthy individuals would be able to wait longer before withdrawing from their tax-favored retirement savings accounts.
“It is particularly unfortunate that these tax cuts are in the package while a provision to allow very low-income seniors and people with disabilities to have modest savings and still qualify for income assistance through the Supplemental Security Income program was excluded, despite bipartisan efforts to include it,” Parrott said.
SECURE 2.0 combines retirement provisions from three separate bipartisan bills coming out of both the House and the Senate — the Enhancing American Retirement Now (EARN) Act (S. 4808), the Securing a Strong Retirement Act of 2022 (H.R. 2954), and the Retirement Improvement and Savings Enhancement to Supplement Healthy Investments for the Nest Egg (RISE & SHINE) Act (S. 4353).
Senate Finance Committee Chair Ron Wyden, D-Ore., who sponsored the EARN Act, which passed unanimously through his committee, commended the inclusion of its provisions in the spending bill.
“The Finance Committee has worked in a bipartisan way to improve the retirement system, building on our success in 2019, and I’m pleased our legislation has been included in the year-end spending package. SECURE 2.0 includes policies put forward by Finance Committee members on both sides of the aisle, and I appreciate the collaboration of [Sen. Mike Crapo, R-Idaho], every step of the way,” Wyden said in a December 20 statement.
Wyden, a longtime champion of retirement security, was a driving force behind the proposed enhanced savers credit.
“For the first time, millions more workers would access resources for retirement and see federal retirement contributions year after year, even if they have no tax liability. These are reforms that will make a meaningful difference for workers who have struggled to save,” Wyden said.
Tax Court Judge Retirement
The retirement package includes the option for Tax Court judges to contribute to the Thrift Savings Plan and receive automatic or matching contributions — a provision intended to put both Tax Court and special trial judges on the same retirement benefits level as other federal judges.
Currently, retirement benefits don’t vest until a Tax Court or special trial judge has served for at least five years, while other federal judges are vested after 18 months.
If a judge receives a Thrift Savings Plan and later receives retirement pay, the retirement will be offset by the amount equal to the distribution.
Annuity benefits for a surviving spouse and dependent children would be computed based on a percentage of a judge’s annual salary and number of dependent children, as with other federal judges.
In the case of a Tax Court or special trial judge who has served less than three consecutive years, service in the U.S. armed forces, as a senator, or as a representative, delegate, or resident commissioner in Congress would count toward vesting.
Retired Tax Court and special trial judges wouldn’t be treated as earning outside income when teaching under the Ethics in Government Act.
Special Trial Judges
Special trial judges currently don’t have the opportunity to participate in judicial retirement programs.
The bill would allow those judges who are eligible to receive retirement pay 180 days after enactment.
The legislation includes a table listing a minimum combination of age and years of service, beginning at age 65 with 15 years of service, or 10 years of service by age 70. The length of service would include all periods, regardless of whether they were consecutive.
The legislation would also allow for the chief judge to recall retired special trial judges to serve for periods not to exceed 90 days in any calendar year. A recalled special trial judge would be paid the same compensation and expense allowances as other special trial judges.
The bill would waive the 18-month vesting period in the event of assassination, which is defined as “the killing of a judge or special trial judge that is motivated by the performance” of the judge’s official duties.