U.S. Sens. Chuck Grassley (R-IA) and Ron Wyden (D-OR) introduced legislation that would improve retirement plans for employers and employees.
The Retirement Enhancement and Savings Act of 2019 (RESA) encourages employers to adopt new retirement plans. It would also reduce the cost of operating retirement plans for their employees and encourage them to save for retirement.
“Planning for retirement is important, yet challenging. The Retirement and Savings Act would help Americans get on the path of saving for a secure retirement during their working years while making sure their savings will last throughout their retirement. It also would make it easier and more cost-effective for small employers to sponsor a retirement plan for their employees,” Grassley, chair of the Senate Finance Committee, said.
Specifically, the bill would create multiple employer plans designed to make it easier for small employers to join together to sponsor a single retirement plan for their workers.
It would also allow employees to invest in lifetime-income arrangements, such as annuities and enhance the ability of employees to transfer their retirement plan assets to a new retirement plan when they change jobs.
Further, it encourages employees to increase their retirement savings annually through automatic increases in contributions to 401(k) plans. Finally, it would allow an employee to pass a limited amount of an IRA or 401(k) account to a family member or other beneficiary.
“Working families are struggling to save for retirement. To allow workers to start saving as early as possible, Congress needs to make it easier for more employers, particularly small employers, to offer retirement plans. Our legislation achieves that goal by allowing employers to band together when offering plans while also helping older Americans close the gap in their savings by contributing tax-free dollars to an IRA,” Wyden, ranking member on the Senate Finance Committee, said.
The American Council of Life Insurers (ACLI) backs the legislation.
“RESA is important public policy that will help more Americans achieve retirement security for themselves and their families,” Susan Neely, president and CEO at ACLI, said. “It’s important and appropriate that this effort is bipartisan, as well. There’s tremendous need to do everything possible to address the retirement savings gap. The Employee Benefit Research Institute reports that only 17 percent of workers are very confident in their ability to live comfortably in retirement.”