The House of Representatives recently passed the Setting Every Community Up for Retirement Enhancement (SECURE) Act by a vote of 417-3. The current version of the SECURE Act would, among its numerous provisions:
- Change the required minimum distribution rules so that required minimum distributions begin following age 72 instead of age 701/2.
- Change the maximum automatic contribution rate for safe harbor qualified automatic contribution plans from 10% to 15%.
- Eliminate the safe harbor notice requirement for nonelective safe harbor 401(k) plans and extend the deadline for sponsors to amend their plans to take advantage of the nonelective safe harbor. Safe harbor match plans would still be required to provide the safe harbor notice.
- Require defined contribution plans to provide participants with annual disclosures about the lifetime income stream they could receive from their plan balances.
- Provide a safe harbor for fiduciaries to select an annuity provider to offer annuities under the plan.
- Eliminate the prohibition on individuals making deductible contributions to traditional IRAs after age 701/2.
- Encourage small employers to offer retirement plans by permitting small employers to join with other unrelated employers to offer pooled employer plans.
Prior to passage of the SECURE Act, the Senate was already considering similar legislation such as the Retirement Enhancement and Savings Act (RESA) and the Retirement Security & Savings Act (RSSA). If the SECURE Act eventually becomes law, it would be the most significant legislation pertaining to retirement plans since the Pension Protection Act of 2006. We will continue to monitor this legislation as it develops and keep you informed about other important benefit changes.
For more information, please contact your Executive Compensation and Employee Benefits Counsel at Smith, Gambrell & Russell, LLP.