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On April 2, 2019, the House Ways and Means Committee favorably reported out H.R. 1994, the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019. The SECURE Act is a compilation of recent retirement legislation from both sides of the aisle, and there is a lot for plan sponsors and participants to be happy about in it.
An amendment from Reps. Vern Buchanan (R-Fla.) and Ron Kind (D-Wis.) added provisions allowing for open multiple employer plans (MEPs) that will allow unrelated businesses to band together to offer a retirement plan to their workers. Rep. Kind noted that these amendments potentially could provide coverage for an additional 700,000 individuals. This step will go a long way towards closing the retirement coverage gap, while maintaining important federal protections for participants under the Employee Retirement Income Security Act.
The Buchanan/Kind amendments also removed the “one bad apple” rule that Treasury had imposed on MEPS. This rule condemns all employers in a MEP to the equivalent of plan qualification jail if one employer does not meet the myriad requirements under the Internal Revenue Code. This no-nonsense solution will provide employers participating in a MEP the security of knowing that one bad action by someone else will not jeopardize their employees.
The SECURE Act also does a lot to help plan sponsors with furthering their employees’ retirement goals, such as:
- increasing the 10 percent cap to 15 for the auto-enrollment safe harbor;
- simplifying the 401(k) safe harbor;
- allowing for trust-to-trust distributions of lifetime income products;
- increasing the required minimum distribution age from 70 & ½ to 72;
- providing a fiduciary safe harbor for selection of a lifetime income provider;
- providing small employer startup and auto enrollment credits;
- allowing consolidated Form 5500s for certain DC plans; and
- easing the nondiscrimination rules for closed plans to protect the benefits of older workers with longer service.
This is a long list, and we applaud the efforts that went into getting there. The U.S. Chamber of Commerce is dedicating to helping to make this list a reality.