ARLINGTON, VA, (November 29, 2022) Congress is poised to pass another comprehensive retirement policy bill this year – what has been nicknamed the SECURE 2.0 bill as it builds on the positive retirement plan provisions and momentum contained in the original SECURE Act from 2019. During the ensuing two years, each of the four Congressional Committees with primary jurisdiction over retirement policy – the House Education and Labor Committee, the House Ways and Means Committee, the Senate Finance Committee and the Senate Health Education Labor and Pensions (HELP) Committee – have completed their work on their respective SECURE 2.0 legislative products – each by unanimous or near-unanimous bipartisan support.
This legislation contains two key provisions that could help close the retirement savings opportunity gap for moderate income Americans. The first is a Saver’s Match Program that would incentivize retirement savings by providing a 50% matching contribution on up to $2,000 in retirement savings annually. Lower- and middle-income Americans would be eligible for this federal government matching contribution regardless of tax liability. Over 108 million Americans would be eligible for the Saver’s Match that would be directly deposited into their retirement account – boosting the savings of moderate-income earners.[1]
“The expanded and enhanced Saver’s Match would both encourage saving and help moderate income earners build wealth by providing an immediate, meaningful return on personal retirement contributions,” commented American Retirement Association CEO Brian Graff.
The second would provide over 19 million new American workers with access to the workplace-based retirement system through the Starter K – a brand new super simple safe harbor 401(k) plan – alongside enhanced retirement plan startup tax credits for employers.[2] Data shows that Americans are 12-15 times more likely to save for retirement if they have access to a retirement savings plan at work. Unfortunately, far too many Americans still don’t have that access – and are missing out on the opportunity to save for retirement – an “opportunity gap” particularly pronounced in the Black and Hispanic communities. Fortunately, data also shows that when moderate income workers are automatically enrolled in a workplace retirement plan there is no racial disparity in retirement savings participation with roughly 80 percent of Black, Hispanic, and White Americans all participating in these programs[3] - a key aspect of this new plan type.
“The Starter K plan makes it easier for small business owners to provide a meaningful benefit to their workers; and when coupled with automatic enrollment, it provides a significant step toward closing not only the nation’s retirement opportunity coverage gap, but racial wealth gaps as well,” noted Graff. “The aggregate impact of expanding access to these programs alongside the powerful financial incentives of the enhanced Saver’s Match is profound”.
A white paper outlining the findings, alongside a state-by-state impact can be found at https://araadvocacy.org/secure-report/
About the American Retirement Association
The American Retirement Association, based in the Washington, D.C. area, is a non-profit professional organization established to empower retirement plan professionals who are dedicated to building a better retirement for Americans. The American Retirement Association comprises five premier retirement industry associations; the American Society of Pension Professionals & Actuaries (ASPPA), the American Society of Enrolled Actuaries (ASEA), the National Association of Plan Advisors (NAPA), the National Tax-deferred Savings Association (NTSA), and the Plan Sponsor Council of America (PSCA). For more information, visit www.usaretirement.org.
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