A number of key improvements to encourage Americans to save more for retirement are concealed in the $1.7 trillion government budget bill for 2023 that senators announced on Tuesday.
These range from requiring employers to enroll more workers in retirement plans to raise the age at which mandatory minimum payouts from retirement plans must be made. The bill also proposes measures to encourage young people to save money earlier in life.
The long-delayed SECURE 2.0 retirement reform legislation is now likely on a path to becoming law as soon as this weekend and would begin to address what is turning into a retirement savings crisis in the United States, according to the measures, which starts on page 2,046 of the massive 4,155-page bill.
What the bill would do
The bill would increase retirement savings options by allowing a deferral on required withdrawals, a higher catch-up contribution to 401(k) plans, and by giving small businesses new options for providing retirement plans to employees, according to a note from Brian Gardner, chief Washington policy strategist at Stifel, published on Tuesday morning.
The measure is a follow-up to the SECURE Act of 2019, which was two years in the process and constituted the first significant retirement legislation since 2006.
The general objective of the upcoming bill is to encourage firms to enroll more employees in retirement plans through a number of different means.
New incentives for automatic enrolment in retirement programs are one such front. As part of the onboarding process, the new regulations would compel companies to immediately enroll new recruits in the company's retirement plan. Studies have revealed that auto-enrollment retirement plans have considerably greater participation rates among companies.