It’s fair to say that retirement can be a difficult goal to achieve. Saving for retirement has never been harder and maintaining retirement income isn’t easy. It takes dedication and financial strategy to enjoy retirement. This is an universal issue, and to address it Congress is pressing forward with legislation that may potentially make securing retirement a more achievable goal, CNBC’s Sarah O’Brian reports.
Retirement Bills, Bills, Bills
The law-making process is anything but fast. The two unique pieces of legislation Congress is backing are the “Strong Retirement Act” or Secure 2.0, and the “Retirement Security and Savings Act.” The Secure 2.0 is officially passed in the House and sits in the Senate; however, the Senate has decided to wait on passing it.
Secure 2.0 bill offers innovated rules and changes for securing retirement, including:
- Easier ways for employer and employee to make 401(k) contributions
- Raising the “catch-up contribution” limit on 401(k)s, letting older Americans invest more at a time
- Auto 401(k) enrolling and matching contributions for employees
- Raising the required minimum distribution (MRD) age from 72 to 75 years old
The Senate’s bill, the Retirement Security and Savings Act, is remarkably like the Secure 2.0 bill. Both bills raise the catch-up limit for seniors, increasing their own retirement contributions by thousands of dollars.
The Differences of Each Bill
While similar, the two bills differ enough to cause a delay. For example, the House’s Secure 2.0 bill requires auto 401(k) enrollment, and the Senate’s bill doesn’t.
Additionally, each bill has different catch-up contribution taxes. The Secure 2.0 bill expands 401 contributions by $10,000 for people between ages 62 and 64, and would treat it as an after-tax contribution, meaning they couldn’t deduct it from their taxable income. The Senate’s Retirement Security and Savings Act would let anyone 60 or older contribute $10,000 to their 401(k) and decide whether it was pre-tax or after tax.
Despite these bills being so similar, they can change. The takeaway is that positive change is a possibility, and seniors might be able to feel some relief when saving for retirement. The Council for Retirement Security believes securing retirement is a right, not a privilege, and is fighting to protect the benefits for all.