SECURE Act Delivers Major Wins for American Savers

Washington, DC; December 17, 2019—Investment Company Institute (ICI) President and CEO Paul Schott Stevens issued the following statement after the US House of Representatives passed the Fiscal Year 2020 Consolidated Domestic and International Assistance Package (H.R. 1865), which includes the Setting Every Community Up for Retirement Enhancement Act (H.R. 1994), also known as the SECURE Act:

“The SECURE Act delivers major wins for American savers. Changes like expanding access to multiple employer plans and raising the auto-enrollment safe harbor cap build on policies that are proven to strengthen our retirement system. Other reforms, such as repealing the maximum age for making traditional IRA contributions and increasing the age required for mandatory distributions, will help align policy with the reality that people are living longer today.

"ICI deeply appreciates the hard work by congressional leadership of both parties, as well as Ways and Means Committee Chairman Richard Neal and Ranking Member Kevin Brady, whose tireless efforts were critical in getting this bill through the legislative process. When it crosses the finish line later this week, it will help more American families save for and achieve a financially secure retirement.”

Highlights of the SECURE Act include:

• allowing companies—regardless of industry—to join together to form multiple employer 401(k) plans;
• increasing the auto-enrollment safe harbor cap from 10 percent to 15 percent;
• simplifying the nonelective contribution 401(k) safe harbor by providing notice and amendment flexibility;
• treating certain taxable non-tuition fellowship and stipend payments as compensation for IRA purposes, thus making it easier for individuals receiving such payments to save through an IRA;
• repealing the maximum age (now 70½) for making traditional IRA contributions;
• increasing the age at which required minimum distributions (RMDs) must start from 70½ to 72;
• expanding the types of education costs that are coverable by 529 plans; and
• increasing the credit limit for small employer start-up costs and creating a new auto-enrollment credit to defray associated start-up costs.

Read Stevens’s op-ed to learn about the importance of the SECURE Act.