It has been nearly a year since Congress passed the SECURE 2.0 Act. As the name of the bill suggests, that law was the second significant retirement savings policy bill enacted in the span of five years. 
A year later, while most practitioners and retirement plan sponsors are focused on the implementation of the new SECURE 2.0 rules, Congress has quietly been putting forward new bipartisan proposals for consideration in the next round of retirement plan policymaking. We also expect more individual-issue bills to be introduced in December and beyond into 2024. Below are short descriptions of some of the proposals already introduced, and two specific legislative projects that the ARA is working on that we expect to be formally introduced in Congress soon.
Automatic Reenrollment
In July 2023, two senior members of the Senate HELP Committee—along with their House Education and Workforce, and Ways and Means Committee, counterparts—introduced the Auto Reenroll Act of 2023 (H.R. 4924/S. 2517). The legislation would amend both ERISA and the Internal Revenue Code (IRC) to permit qualified automatic contribution arrangements (QACAs) and eligible automatic contribution arrangements (EACAs) to automatically reenroll workers back into the retirement plan at least one time every three years.
Startup Credit Boost for Micro Employers
In October 2023, two key members of the House Ways and Means Committee, Reps. Claudia Tenney (R-NY) and Dan Kildee (D-MI) introduced the Retirement Investment in Small Employers (RISE) Act (H.R. 6007). The legislation would create a new Micro Employer Pension Plan Startup Credit in IRC Section 45E for qualified micro employers. A qualified micro employer is defined as an employer with 10 or fewer employees. The credit amount is 100% of any retirement plan administrative costs up to $2,500 for the first three years after adoption of the retirement plan.
ERISA Minimum Age Participation Requirement
In November 2023, Sen. Bill Cassidy (R-LA), Ranking Member of the Senate HELP Committee, and Sen. Tim Kaine (D-VA) introduced the Helping Young Americans Save for Retirement Act (S. 3305). The legislation would lower the minimum participation age ERISA-covered defined contribution (DC) plans from age 21 to age 18. The legislation also would exempt 18 to 20-year-old employees from testing related to retirement funds that would otherwise increase the cost of administering retirement plans for these employees, thereby mirroring the administrative treatment of long-term part-time employees (LTPTEs).
Roth IRA Rollovers
The first ARA legislative priority for the next bipartisan retirement policy bill is to allow retirement savers to roll over any of their Roth IRA savings into a Roth bucket within a workplace-based DC plan. Under current law, workers are prohibited from rolling Roth IRA savings into a designated Roth savings account within a workplace-based retirement plan. Allowing workers to move their Roth IRA balances into designated Roth accounts in a workplace retirement plan would benefit workers in several ways.
SECURE 2.0 codified a new auto-portability process so that a worker’s 401(k) account balance can automatically roll over to their new employer’s 401(k) plan after a job change. However, because the balance moves through an IRA, any Roth amounts will have to remain in the IRA while the pre-tax amounts will transfer to the new plan.
This fix would allow for the seamless transfer of Roth savings through the auto-portability process. Permitting consolidation of assets in workplace retirement plans would reduce duplicative fees inherent in maintaining multiple accounts, which would result in greater retirement savings. Enhanced portability would reduce “leakage” (i.e., funds being taken out of retirement accounts prior to the age of retirement) by making it possible for Roth IRA accounts to be rolled into a Roth designated account housed in a new employer’s plan.
Retirement Plan Tax Credits for Charities
The second ARA legislative priority is to extend the small employer pension plan startup and automatic enrollment credits to tax-exempt entities. Nonprofit Metrics LLC estimates that there are over 1.8 million active tax-exempt organizations in the United States. These entities, because they do not have taxable income, are not able to use the credits under existing law to encourage the establishment of qualified retirement plans.
The ARA proposes to enable small tax-exempt entities to apply the small employer pension plan startup and automatic enrollment credits against the organization’s liability for payroll taxes for the taxable year. This proposal mirrors an existing program that gives small tax-exempt organizations a payroll tax break against expenses for employee health insurance expenses.
Andrew Remo is the Director of Federal & State Legislative Affairs for the American Retirement Association.
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