Retirement plan advisors are hopeful that Congress will work together before the end of the year to pass legislation collectively known as SECURE Act 2.0. This critical legislation would build on the provisions of the SECURE Act of 2019 and help workers better prepare for retirement.
SECURE Act 2.0 consists of the Securing a Strong Retirement Act of 2022 that the House passed in March, as well as two bills that the Senate passed in June: the Enhancing American Retirement Now Act and the Retirement Improvement and Savings Enhancement to Supplement Healthy Investments for the Nest Egg Act. Congress must still reconcile the differences between these bills and submit a final bill for a vote before President Biden could sign the legislation into law.
This legislation aims to fill the existing gaps in the current retirement system for workers. First, while many workers are saving, they realistically will outlive their savings without lifetime income, which leads to the so-called “guarantee gap.” Second, workers are not saving enough to last multiple decades into retirement, which results in the “savings gap.” Finally, the “access gap” arises from insufficient workers having access to employer-sponsored plans.
The most significant provisions in the SECURE Act 2.0 legislation include the following:
- Expanded access to retirement plans;
- Additional investment options;
- Increased savings;
- Income preservation; and
- Simpler plan administration.
