Senate moves forward bill to raise age for RMDs to 75

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The Senate Finance Committee on Wednesday introduced a bill that would raise the age for required minimum retirement benefits to age 75, among other provisions designed to bolster Americans’ retirement security.

The Enhancing American Retirement Now (EARN) Act is half of the Senate version of SECURE Act 2.0, the pension law passed by the House of Representatives in March. The other half, called the RISE & SHINE Act, stepped down from the Senate Committee on Health, Education, Labor and Pensions earlier this month. Part of the legislator’s job now is to reconcile these versions and agree on a final version of what would become the second major pension bill in less than three years, a successor to the SECURE Act in late 2019.

The legislation is unlikely to move through to a full Senate vote as there are relatively few legislative days left in the year before the chamber’s already packed agenda, said Paul Richman, Chief Government and Political Affairs Officer at the Insured. Retirement Institute. Instead, the most likely avenue for approval is for members of the House and Senate committee to work together behind the scenes to draft a bill that would be added to another piece of legislation to be passed by the end of the year. like a spending law.

“Now we have a framework of what could be in the final bill,” Richman said. While passage isn’t guaranteed, the legislation’s strong bipartisan support gives it a greater chance of success, he noted.

Lawmakers must then agree on the details. For example, the EARN bill would raise the age for required minimum benefits to 75, from the current 72, in effect after 2031, while the House version calls for a more phased approach that would raise the age to 75 by 2033.

Here are other important provisions in the EARN Act:

• Allowing employers to make appropriate contributions to 401(k) and other tax-preferred retirement plans for employee student loan payments as if those payments were retirement contributions, effective 2023.

• Require catch-up contributions to an employer retirement plan for savers age 50 and older to be made as after-tax Roth contributions, effective 2023.

• Allow participants between the ages of 60 and 63 to contribute an additional $10,000 in catch-up contributions to 401(k) plans, indexed for inflation, effective after 2024.

• Require an employer with a 401(k) plan to allow part-time employees with at least 500 hours of service in two consecutive years to participate in the plan, effective 2022 (a decrease from three consecutive years as outlined in the Secure Act).

“There is nothing that changes the world, but there are small changes that can have an incremental beneficial effect,” said Michael Kreps, co-chair of the pension services group at Groom Law Group. “It seems like a good government to me.”

Write to Elizabeth O’Brien at elizabeth.obrien@barrons.com