More on the Legislation that Could Alter your Retirement Savings

July 24, 2018

By Colin O'Shea • Securities Analyst  

If you're scrimping to save for retirement, you'll be happy to know there is a legislative proposal in Congress aimed at helping you save more money, more easily. It's called the Retirement Enhancement and Savings Act (RESA), and it will likely be a subject for Congress in the next several months or years ahead.

What is the Retirement Enhancement and Savings Act?

The Retirement Enhancement and Savings Act (RESA) is proposed legislation aimed at encouraging Americans to increase their voluntary retirement savings. The bill seeks to not only improve the current system, but also open up more opportunities to anyone who isn't currently participating in an employer-sponsored plan. The bill was passed unanimously on a bipartisan basis by the Senate Finance Committee in 2016, but died later that year when Congress adjourned. It has since re-emerged with a batch of proposed changes related to Individual Retirement Accounts (IRAs) and employer-sponsored 401(k) plans:

Proposed IRA Changes

• Incentives to encourage savings that may be tapped in an emergency.
• The repeal of a provision that prevents people over the age of 70½ from contributing to traditional Individual Retirement Accounts.

proposed 401(k) changes

• A requirement for retirement plans to disclose the projected monthly annuity income employees’ savings would provide.
• Increase measures to encourage small employers to use automatic enrollment, with the ability to raise contribution rates above 10% (the current cap that applies to some plans).
• Encourage 401(k) style plans to offer annuities with more protection of the promised payment (currently not often used for liability concerns if an insurance company fails to pay claims).
• Expand a tax credit available to small companies to offset the costs of starting a new retirement plan.  The credit may increase from $500 to as much as $5000 for 3 years.
• Small employers would be able to band together in a MEP (Multiple Employer Plan) to distribute the costs of starting and maintaining a 401(k) plan with no restrictions. Currently only employers with an affiliation or connection may band together.

Stay connected and we will keep you updated as to any new changes that become law and how they might affect your road to retirement.  Contact us to review your portfolio and what you want to achieve.  We’ll make sure you have the best possible opportunity for success.