The House of Representatives is poised to vote on legislation aimed at enhancing the retirement system. What you need to know.

This week, the House of Representatives may vote on legislation to enhance the retirement savings system for U.S. workers.

The Securing a Strong Retirement Act, or Secure Act 2.0, could be voted on by the House as early as Tuesday.

The Secure Act, as written by House majority leader Steny Hoyer, D-Md., aims to increase Americans' access to retirement funds and assist families in saving for the future through expanding automatic enrollment in employer-provided retirement plans, simplifying rules for small businesses, and helping those close to retirement save more for an extended period.

Paying off debt now can save U.S. households nearly $300 per month due to inflation.

The bill, which was approved by the House Ways and Means Committee in a unanimous, bipartisan voice vote in 2021, is a follow-up to the first Secure Act, which was passed in 2019.

"Lisa Featherngill, national director of wealth planning at Comerica Bank, stated that the plan has provisions that are advantageous for individuals to save more for retirement and are also beneficial for younger savers."

Highlights of the bill

The Second Secure Act contains several provisions that would be advantageous to retirement savers and employers.

Employers would be required to automatically enroll eligible workers in 401(k) plans at a rate of 3% of salary, which would increase annually until the employee is contributing 10% of their pay. Employees could opt out or select a different contribution amount. Businesses with 10 or fewer employees or are less than 3 years old would be exempt from the mandate.

The plan proposes modifications to the contribution limits for savers nearing retirement and the withdrawal requirements for retirees. Specifically, individuals aged 62, 63, and 64 would be allowed to make catch-up contributions of $10,000, an increase from the current limit of $6,500.

The minimum age requirement for required minimum distributions will increase to 73 in 2022, 74 in 2029, and 75 by 2032, from the current 72.

Employers would be able to match student loan payments as contributions to retirement, providing a retirement boost for student loan borrowers through legislation.

"Featherngill stated that if someone has significant student loans and can't contribute much to their 401(k), they can still receive an employer match on the amount paid towards their student loans."

Featherngill suggested that young workers could benefit from being able to choose whether an employer match should be applied to a Roth 401(k), which would offer a tax advantage during retirement.

The legislation would provide tax credits for survivors of domestic abuse, small business owners, and low-wage workers, and establish a national database for Americans to recover lost retirement accounts.

What's next

The Secure Act has bipartisan support and other bills in Congress that overlap with it could improve retirement saving if passed.

In February, the House Education and Labor Committee made changes to the RISE Act, H.R. 5891, which deals with retirement savings plans in addition to education.

Two bills in the Senate focus on retirement savings: the Retirement Security and Savings Act, S. 1770, and the Improving Access to Retirement Savings Act, S. 1703.

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