May 3, 2021
House Ways and Means Chairman Robert Neal (D-Ma.) Scheduled a committee vote on Wednesday on a bill to revise the rules governing retirement accounts, including increasing the minimum age required for distribution.
The legislation, dubbed the Secure 2.1 or « Securing a Strong Retirement Act of 2021 », would increase the age for the required minimum distribution (RMD) from 72 to 75 years, raise the limits on IRA catch-up contributions, and automatically enroll in 401 expand (k), 403 (b), and simple plans, and provide the ability for employers to reconcile student loan payments from employees in qualifying plans according to a copy of Neal’s invoice.
The bill would create a graduated RMD age based on a person’s date of birth. For example, for those who will turn 72 after December 31, 2021 and 73 before January 1, 2029, the new age for RMDs will be 73 instead of 72.
« In the case of a person who turns 73 after December 31, 2028 and turns 74 before January 1, 2032, the applicable age is 74. In the case of a person who turns 74 after December 31, 2031 . Age is 75 « , it says in the invoice.
The bill would also expand the IRA catch-up limit of $ 1,000 by indexing it to cost of living adjustments. Higher catch-up limits would apply at the age of 62, 63 and 64 years.
Individuals could also make higher catch-up contributions to qualified pension plans that would also be tied to the cost of living index. Simple plan participants who are 62 years old but not 65 years old could contribute an additional $ 10,000 to a plan, while qualified individuals with simple plans could contribute an additional $ 5,000 from 2021 onwards.
The bill would also allow employers to make appropriate contributions to a defined contribution plan for employees who repay qualified student loan payments.
In an important nod to the insurance industry, Neal’s bill would also remove the required minimum distributional barriers for life annuities and allow the use of qualified longevity annuity contracts and insurance-specific exchange-traded funds in qualified pension plans.
Neal, who spoke at an Aspen Institute seminar over the weekend, said he expected as much bipartisan support for the legislation as the original Secure Act, which Congress passed in December 2019.